A number of startups have taken the confidential pre-filing route since the markets regulator introduced it in 2022. The ability to gauge qualified investors’ interest without disclosing sensitive business information to the public make it a preferred option for startups, explains S Shanthi
l What is confidential pre-filing?
CONFIDENTIAL FILING OF the draft red herring prospectus (DRHP) allows companies planning to go for a public float to submit their DRHP to the Securities and Exchange Board of India (Sebi) and the relevant stock exchanges (NSE and BSE) in a non-public or confidential manner. Simply put, a company files a DRHP, but it is not made public until a later stage when it decides to proceed with its initial public offer (IPO). Confidential filings are very common in the US, the UK and Canada, particularly among high-growth and tech-led companies.
Tata Play (formerly called Tata Sky) was the first company in India to take the confidential pre-filing route for its IPO in December 2022 after Sebi introduced confidential pre-filing of IPO documents as an optional alternative tool. Some other companies that followed suit include Groww, Shiprocket, boAt, PhysicsWallah, Swiggy, Vishal Mega Mart, and more recently, Aequs. The share of total confidential pre-filings in total filings has increased from 2% in 2023 to 10% in 2025, as of May 2025, per Sebi and other public data.
l What are the strategic advantages?
CONFIDENTIAL PRE-FILING ALLOWS firms to balance regulatory compliance with strategic discretion. They can quietly fix compliance or disclosure gaps based on Sebi’s observations without reputational risk. “It gives companies early visibility into Sebi’s feedback. This allows them to refine disclosures and address issues privately,” Kartikeya Prakash, partner, Khaitan & Co, said. It also gives more time to prepare and market the issue, enabling firms to better align with market conditions. Sebi has allowed an 18-month window post initial observations for an IPO via the pre-filing route and 12 months to launch an IPO after final observations under the regular route. More importantly, by deferring public disclosure, firms can shield sensitive financial and operational data from competitors, maintaining confidentiality until the IPO is announced.
l Why more startups go for it
STARTUPS OFTEN HAVE unique or evolving business models and may not be sure of how Sebi will view them. “The confidential filing allows them to gauge qualified investor interest while keeping sensitive business information such as KPIs and operational disclosures confidential. It allows firms to start parallel road-shows with qualified institutional buyers (QIBs) to get a sense of the demand and valuations,” says Adeepto Saha, executive director, Deloitte India. This way, if investor interest doesn’t match expectations or if the markets fall, firms can choose not to go ahead with an IPO while still keeping sensitive business information confidential. Analysts say legacy firms tend to differentiate themselves on their ability to better others at execution and/ or deploy capital effectively. “Such differentiators take time and expertise to develop, thus, public disclosures pose limited risk of competitors emulating their strengths quickly,” he adds.
l How is the process different?
SEBI SCRUTINY AND compliance expectations remain the same—issuers must still address all regulatory comments. “The confidential filing process begins with submitting a draft prospectus to Sebi, akin to public filings. The regulatory review remains rigorous, ensuring compliance with all applicable standards,” says Ramakrishnan Subramaniam, managing director, capital markets advisory, PwC India. Pre-filing, however, introduces another layer in the process, with extra documentation and an interim filing before the final offer document is made public. Another difference is the requirement for a 21-day public notice period during which a confidentially filed offer document must be made available publicly for comments, say experts. “This is done to allow members of the public, including competitors and vendors, to review and comment on the offer documents. This is a necessary step before companies are allowed to publicly raise funds and is aimed at protecting all groups of public market investors,” Saha said.
l Are there any disadvantages?
THE PRE-FILING MECHANISM does have some disadvantages. For instance, adjustments based on Sebi’s feedback can lead to delays in progression, requiring patience and adaptability. Limited early public sentiment is another challenge as when compared to a regular filing process, here the offer documents are not available for public review and comments from the day of filing a DRHP. “Absence of early public data can hinder preliminary investor sentiment analysis, limiting broader market visibility until the offering is ready to be unveiled,” Subramaniam says. Again, during the confidential stage, firms can only approach a limited number of QIBs, and all communication must be strictly within the boundaries of the filed draft. Pre-filing also introduces another layer in the process, with extra documentation and an interim filing. “This additional step may lead to costs, including legal, banking, and compliance expenses, increasing and may marginally extend the IPO timeline,” Prakash says.