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Informist, Thursday, Jul. 31, 2025

 

--SEBI releases consultation paper on investors' participation in IPO

--SEBI proposes to ease norms related to number of anchor investors for IPO

--SEBI proposes to cut retail allocation to 25% from 35% for large IPOs

--SEBI proposes to raise QIB allocation to 60% from 50% for large IPOs

 

NEW DELHI – The Securities and Exchange Board of India Thursday issued a consultation paper proposing changes to current provisions in its issue of capital regulations on investor participation in initial public offers. The market regulator has proposed cutting the retail investor category allocation to 25% from 35% in a graded manner in large IPOs of issue size above INR 50 billion.

 

At the same time, for these large IPOs, SEBI has proposed raising the allocation for qualified institutional buyers to 60% from 50% in a graded manner subject to an upper limit of INR 80 billion in value terms. Within the qualified institutional buyers' category, SEBI has proposed an increase in the reservation limit for mutual funds to 15% from 5% under the non-anchor QIB category.

 

In the anchor investor framework, SEBI has proposed increasing "the number of permissible anchor investor allottees for allocations" above INR 2.50 billion. For allocations below INR 2.5 billion, 5-15 investors shall be allowed. For every additional INR 2.5 billion or part thereof, an additional 15 investors instead of 10 may be permitted subject to a minimum allotment of INR 50 million per investor, SEBI said in the consultation paper.

 

SEBI said this move is aimed at accommodating large foreign portfolio investors operating multiple funds with distinct income tax permanent account numbers. These FPIs currently face allocation limits due to line caps, SEBI said.

 

The market regulator has also proposed including insurance companies and pension funds in the reserved category of anchor portion along with mutual funds. Further, it wants the reservation of the anchor investor portion to be raised to 45% from 33% for life insurance companies, pension funds, and domestic mutual funds. This will be subject to the condition that one-third of the anchor investor portion be reserved for domestic mutual funds.  End

 

Reported by Rajesh Gajra

Edited by Ashish Shirke

 

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