Introduction
Have you ever thought that an edtech unicorn like PhysicsWallah, once just a YouTube teaching channel, would quietly prepare for a multi-thousand crore Initial Public Offering (IPO) without anyone knowing until the last stage.
Well, that’s exactly what’s happening. PhysicsWallah, along with startups like Meesho and Groww, has chosen the confidential pre-filing route under the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) 2018 [SEBI (ICDR) Regulations, 2018]. The SEBI revolutionized India’s capital markets landscape with the introduction of confidential IPO filing provisions under the SEBI (ICDR) Regulations, 2018 by introduction of Chapter IIA i.e. Initial public offer on main board through pre-filing of draft offer document. This pathway allows companies to explore an IPO discreetly, shielding sensitive data and strategies from competitors, while still ensuring investor protection before the public issue opens.
This reform is reshaping India’s capital market strategy.
Traditional vs. Confidential IPO Filing
Traditional Route
Under the conventional route, any company planning an IPO is required to follow a structured process, which broadly unfolds as follows:
- Filing of DRHP:
- Public Availability:
- Publicity & Research Reports:
- SEBI Review & Clarifications:
- Stock Exchange Approval:
- SEBI Observation Letter:
- Updated DRHP (UDRHP):
- RHP Filing & Price Band Advertisement:
- Public Issue Period:
- Final Prospectus Filing:
The issuer, through its lead manager, files the Draft Red Herring Prospectus (DRHP) with SEBI and the stock exchanges.
Once filed, the DRHP is made accessible in the public domain for a minimum of 21 days, enabling investors, market participants, and the public to provide comments or raise concerns.
During this stage, issuers are permitted to undertake publicity and marketing initiatives, subject to the restrictions under Schedule IX of the ICDR Regulations, which govern public communications and advertising materials.
SEBI examines the DRHP and may seek clarifications from the lead manager to ensure compliance with disclosure norms and investor protection principles.
Simultaneously, the stock exchanges review the proposal and grant in-principle approval for listing, which is then communicated to SEBI.
After receiving satisfactory clarifications and the stock exchange’s approval, SEBI issues its Observation Letter. This must be done within 30 days from the later of (a) receipt of clarifications or (b) receipt of exchange approval.
The issuer is allowed to launch the IPO within 12 months from the date of SEBI’s Observation Letter. Before doing so, it files an Updated DRHP (UDRHP), incorporating SEBI’s observations.
The issuer then files the Red Herring Prospectus (RHP) with the Registrar of Companies (RoC). A price band advertisement must be issued after the RHP filing but at least two days prior to the issue opening.
The IPO remains open for subscription for a minimum of three days.
After the issue closes successfully, the issuer files the final Prospectus with SEBI and the RoC, completing the IPO process.
Confidential Pre-filing Route
SEBI has introduced Chapter IIA into the SEBI (ICDR) Regulations, 2018, which sets out an optional pre-filing mechanism for issuers. This provides a more discreet route for companies exploring IPOs. The step-by-step process is as follows:
- Initial Submission:
- Public Announcement:
- Limited QIB Interaction:
- SEBI Review & Observations:
- UDRHP-I (Updated Draft Red Herring Prospectus – I):
- UDRHP-II (Updated Draft Red Herring Prospectus – II):
- Timeline for Market Entry:
The issuer, through its lead manager, submits a pre-filed draft offer document with SEBI and the stock exchanges.
Unlike the traditional route, the draft is not placed in the public domain at this stage. However, the issuer must make a public announcement confirming the confidential filing within two working days of submission in one English national daily newspaper with wide circulation, one Hindi national daily newspaper with wide circulation and one regional language newspaper with wide circulation at the place where the registered office of the issuer is situated, disclosing the fact of filing of pre-filing of the draft offer document without providing any other details in relation to the intended issue. Issuer shall state in the public announcement that the pre-filing of offer document shall not necessarily mean that the issuer shall undertake the initial public offering.
From the date of pre-filing until SEBI issues its Observation Letter, the issuer is permitted to conduct limited marketing exercises with Qualified Institutional Buyers (QIBs). This helps test market appetite without full public disclosure.
SEBI reviews the pre-filed draft and issues its Observation Letter after ensuring compliance with regulatory requirements.
Post-SEBI observations, the issuer must file UDRHP-I, incorporating the required changes. Unlike the confidential draft, this version is placed in the public domain for at least 21 days to invite comments from the public.
After considering public comments, the issuer prepares and files UDRHP-II, incorporating necessary revisions and disclosures.
The issuer can access the capital market within 18 months of SEBI’s Observation Letter. However, to remain eligible, UDRHP-I must be filed within 16 months from the date of the Observation Letter.
Why Companies Prefer This Route
- Strategic Shield:
- Greater Flexibility:
- Reputation Management:
Companies safeguard their sensitive strategies and valuations until they are ready for public disclosure. Example: PhysicsWallah, in March 2025, filed confidentially with SEBI for a approximately ₹4,600 crore IPO. By keeping its early filings private, it avoided exposing its aggressive growth and expansion plans in the edtech space to competitors.
The confidential mechanism allows issuers to align their IPO timing with favourable market conditions rather than being locked into a rigid schedule. Example: Meesho, the e-commerce platform, used the confidential route in 2025 for its proposed ₹4,250 crore IPO, giving it flexibility to fine-tune the launch around investor sentiment and market cycles.
If an IPO is delayed or withdrawn, the issuer avoids reputational risk, since the draft document is not publicly visible in the early stages. Example: Oyo confidentially refiled its IPO in March 2023 and subsequently withdrew, avoiding prolonged public disclosure.
Offer for Sale (OFS) under the Confidential Filing Route
Another important dimension of the IPO framework particularly in the context of private equity and venture capital exits is the Offer for Sale (OFS). SEBI has clarified specific eligibility requirements for OFS in the confidential filing mechanism under the ICDR Regulations.
Holding Period: For the purpose of an IPO, the mandatory one-year holding period of the shares proposed to be offered is computed from the date of filing the UDRHP-I.
Change in OFS Size: If the size of the OFS undergoes a change of more than 50% after the confidential draft filing, the issuer will have to refile the draft. This ensures that the market and regulator have visibility into the true extent of promoter/investor exits.
As many companies that filed DRHPs ultimately did not proceed with the IPO, yet their sensitive business data remained public a major downside of the traditional route. Confidential filing effectively mitigates this issue by keeping early-stage data private if an IPO doesn’t materialize. Confidential IPO filing is not just a technical tweak in SEBI’s regulations it’s a silent revolution. India’s confidential IPO route isn’t just a regulatory tweak it’s a strategic tool reshaping how startups and established firms approach listing. Case studies from PhysicsWallah’s stealth filing to Oyo’s confidential withdrawal highlight its power in balancing discretion, flexibility, and investor protection.
