Hyderabad-based Gemini Edibles & Fats India filed a Draft Red Herring Prospectus with SEBI to raise funds through an IPO structured entirely as an Offer for Sale by promoters and existing investors. No fresh shares will be issued, meaning the company receives zero proceeds; all funds flow to selling shareholders. GEF is a major edible oils player, marketing the Freedom brand. The filing initiates SEBI's review process before the company can list on stock exchanges.

An IPO can be structured in two ways: a fresh issue of new shares (where the company raises capital directly) or an Offer for Sale (OFS), where existing shareholders sell their stakes to the public. When an IPO is entirely OFS, as in this case, the company itself receives no funds — all proceeds go to the promoters and investors exiting their positions. This is a critical structural distinction that regulators, analysts, and exam setters pay close attention to.

From a regulatory standpoint, SEBI mandates disclosure of this structure prominently in the DRHP (Draft Red Herring Prospectus) so investors understand that the IPO serves as an exit mechanism for existing stakeholders rather than a capital-raising event for the business. The company still undergoes the same SEBI scrutiny — financial disclosures, risk factors, lock-in norms — but the use of proceeds section is markedly different.

For investors, a pure OFS IPO raises questions about why promoters are exiting, whether the company needs no additional capital (positive signal) or whether promoters are simply cashing out. Lock-in rules differ too: in a fresh issue, promoter shares are locked in for three years; in OFS portions, the selling shareholders are exiting entirely.

SEBI's ICDR Regulations govern the IPO process, including eligibility, pricing, allotment, and disclosure norms. The DRHP, once filed, is publicly available for investor scrutiny before SEBI issues its observations letter, which the company must receive before proceeding to the actual IPO.