The Securities and Exchange Board of India (SEBI) has updated the allocation framework for anchor investors in initial public offerings, increasing the anchor-investor reservation from 33% to 40%.
Key Highlights
- SEBI increases IPO anchor investor reservation to 40%, enhancing institutional participation and market stability in primary issuances.
- New SEBI rules under ICDR amendment aim to strengthen IPO book-building transparency and investor confidence across capital markets.
Under the revised guidelines, domestic mutual funds will receive 33% of the anchor portion, while insurers and pension funds are allocated the remaining 7%. If the 7% reserved for insurers and pension funds goes unsubscribed, it will be reallocated to mutual funds.
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In addition, SEBI has raised the cap on the number of anchor investors allowed in IPOs with anchor portions exceeding ₹250 crore from 10 to 15 anchor investors per ₹250 crore. The regulator also merged the previous Category I (up to ₹10 crore) and Category II (above ₹10 crore up to ₹250 crore) discretionary anchor allocation categories into a single category for issues up to ₹250 crore, with a minimum of 5 and maximum of 15 anchor investors, and a minimum allotment of ₹5 crore each.
These amendments are part of SEBI’s broader efforts to strengthen institutional footing and stability in the IPO market by widening participation of long-term investors. The changes will take effect from 30 November 2025, after amendments to the ICDR (Issue of Capital and Disclosure Requirements) norms.
