Confidential Overview of Pre-filing of DRHP

I. Introduction

In a significant move aimed at enhancing confidentiality in the Initial Public Offering (“IPO”) process, the Securities and Exchange Board of India (“SEBI”) introduced a confidential filing mechanism for main board IPOs.

Traditionally, companies pursuing a public listing were required to file a Draft Red Herring Prospectus (“DRHP”) publicly at the outset, thereby exposing sensitive business information early in the process. Recognizing the need for greater discretion especially for new-age, high-growth companies operating in competitive sectors and aligning with international best practices, SEBI introduced a framework that enables companies to pre-file their DRHP with SEBI while preserving strategic and proprietary information during the early stages.

This mechanism enables eligible companies to submit their DRHP confidentially to SEBI and stock exchanges for review and in-principle approvals. Under this process, an updated DRHP (“UDRHP-I”) is made public only after addressing SEBI’s initial observations, followed by a second confidential submission (“UDRHP-II”) prior to filing the Red Herring Prospectus (“RHP”).

The confidential filing process provides issuers with the opportunity to incorporate regulatory feedback, assess market conditions, and engage with investors before formally launching the IPO. This method has been particularly attractive to technology-led and growth-stage companies, such as Shadowfax, Groww, and boAt, as per publicly available information.

II. International practise

Globally, confidential IPO filings are a norm among developed markets:

·  USA: The U.S. SEC permits confidential filings under the JOBS Act, enabling Emerging Growth Companies to test investor appetite privately.

·  UK & EU: Regulators allow private submission of draft prospectuses prior to public exposure.

·  Canada: Pre-consultation processes help issuers engage with provincial regulators before finalizing filing content.

India’s pre-filing of DRHP model, introduced in 2022, has adopted similar approved with these international practices especially beneficial for fintech, logistics, and other sensitive sectors.

III. Indian legal framework on PDRHP

SEBI Consultation Paper – May 11, 2022

To build consensus, SEBI released a Consultation Paper on May 11, 2022, proposing a confidential filing regime that would offer flexibility and reduce reputational risk.

 “The pre-filing mechanism would allow issuers to seek regulatory feedback and test investor appetite before making their IPO plans public.”

Key Proposals:

·  File PDRHP confidentially with SEBI and exchanges

·  Permit limited QIB interactions under NDA

·  Allow structural changes in issue (e.g., size, object) before public filing

·  Convert outstanding convertibles after PDRHP (pre-UDRHP-I)

·  No public comment until UDRHP-I stage

Public comments on SEBI’s consultation paper and PMAC Review

SEBI received 16 formal responses:

· 14 supported the proposal (including top law firms, merchant bankers, associations)

· 2 raised concerns on timeline uncertainty and cost

SEBI Board Paper Para 4.1: “Most of the commenters supported the proposal, stating that the pre-filing mechanism would help protect the privacy and strategic interests of issuers.”

PMAC Recommendations:

· Allow QIB engagement under NDA

· Implement 7-day cooling-off after QIB TTW

· Permit multiple PDRHP revisions before SEBI observations

These suggestions were fully integrated into the final regulations.

SEBI Board Approval – November 2022

SEBI Board approved the framework in its meeting on November 30, 2022 under Agenda Item No. 7.

“The Board approved the introduction of pre-filing of offer document as an optional mechanism... including enabling issuer companies to interact with QIBs…”

· Regulations 59C–59E and Schedule XVI were inserted into the SEBI ICDR Regulations.

· Observation timeline: 30 working days from the latest trigger (e.g., exchange approvals, QIB closure, etc.)

· Observation validity: 18 months if UDRHP-I is filed within 16 months.

The Confidential DRHP mechanism is governed by the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018, amended via the Fourth Amendment, notified on November 21, 2022.

Key Provisions:

· Regulation 59C: Enables pre-filing of DRHP (PDRHP) confidentially with SEBI and stock exchanges.

· Regulation 59D: Permits Testing the Waters (TTW) with Qualified Institutional Buyers (QIBs), under confidentiality norms.

· Regulation 59E: Allows conversion of outstanding convertibles after PDRHP but before UDRHP-I.

· Schedule XVI: Specifies timelines, public notices, repository uploads, and QIB interaction protocols.

This framework allows early SEBI engagement while keeping company data non-public until a company is truly ready to go to market.

IV. Companies Filing Confidential DRHP

Sl.	Company	DRHP Filing Period	Tentative Issue Size/Range
1.	INOX Clean Energy	July 2025	₹6,000 Crores
2.	Shadowfax Technologies	July 2025	₹2,500 Crores
3.	Meesho	July 2025	₹4,250 Crores
4.	Steamhouse India	July 2025	₹500 ~ ₹700 Crores
5.	Gaja Alternative Asset Management	June 2025	₹500 ~ ₹600 Crores
6.	Groww	May 2025	$700 million to $1 billion
7.	Shiprocket	May 2025	₹2,000 ~ ₹2,500 Crores
8.	boAt (Imagine Marketing)	July 2024	₹2,000 Crores

I.  Key Nuances in Confidential DRHP Filing

·  Confidentiality: PDRHP is not public; companies can test IPO readiness discreetly.

·  QIB Interaction: Permitted before UDRHP-I under NDA (Reg 59D).

·  Public Notice: 1-page notice under Reg 59C(5) in English, Hindi & regional press.

·  Convertible Flexibility: No need to convert pre-filing (Reg 59E).

·  Issue Size Change: Up to 50% permitted without re-filing before UDRHP-I.

·  SEBI Review: Tied to closure of QIB TTW and in-principle exchange approvals.

II. Comparative Table: Traditional vs Confidential DRHP

Feature	Non-Confidential DRHP	Confidential DRHP
Public Access to DRHP	Immediately on filing	Only after UDRHP-I filing
QIB Marketing	Post-DRHP	Pre-UDRHP-I under NDA (Reg 59D)
Convertible Conversion	Before DRHP	Allowed post-PDRHP (Reg 59E)
Offer Size Flexibility	±20%	±50% pre-UDRHP-I
Public Comments	On DRHP	On UDRHP-I (21 days)
Observation Validity	12 months	18 months

III.  Filing Stages and Timelines

·  File PDRHP (confidential; Reg 59C)

·  Optional QIB TTW under NDA (Reg 59D)

·  SEBI observations after last trigger (PDRHP, approvals, TTW closure)

·  File UDRHP-I publicly

·  21-day public comment window

·  File UDRHP-II and final RHP

·  Open IPO within 18 months (UDRHP-I within 16 months)

IV. Disclosure Requirements

·  PDRHP: Full Schedule IV compliance (business, risk, financials, etc.)

·  UDRHP-I: Incorporates SEBI observations

·  UDRHP-II: Reflects public feedback

·  RHP: Final disclosure before IPO opens

V.  Eligibility Conditions

· Applicable to Main Board IPOs only

·  Filing fees as per Schedule III

·  PAN, Passport, and Director details required under Reg 59C(2)

·  Merchant banker to file Form AA (Schedule V)

·  Public notice under Reg 59C(5) mandatory

VI. Repository Upload Requirement on SEBI Portal

Per Reg 59C(6) and Schedule XVI, issuer must upload post-UDRHP-I:

·  UDRHP-I, UDRHP-II, RHP

·  SEBI observations

·  Public comments and responses

·  Marketing materials and disclosures

·  Must be updated throughout the process for investor transparency.

VII. Conclusion

The Confidential DRHP filing regime is a milestone reform in India’s capital markets. It allows issuers to engage with regulators and key investors discreetly while maintaining compliance, flexibility, and optionality. For professionals merchant bankers, CFOs, legal advisors this tool enables better IPO planning, protects valuation sensitivity, and ensures strategic discretion.

When advising clients or preparing for public issuance, confidential pre-filing should be evaluated as a core strategic option, not just a procedural alternative.

Disclaimer: This article is intended solely for informational and educational purposes. It is not a substitute for legal, regulatory, or financial advice. Readers should consult their legal, financial, or compliance advisors before taking any decision based on this material. The content reflects regulations and practices as of the date of writing and may be subject to change.