SEBI amends ICDR norms to broaden institutional investors participation in IPOs

In a recent notification, the Securities and Exchange Board of India (SEBI) announced amendments to the Issue of Capital and Disclosure Requirements (ICDR) regulations, overhauling the share allocation framework for anchor investors in initial public offerings (IPOs).

The revised framework seeks to enhance the participation of domestic institutional investors, including mutual funds, insurance companies, and pension funds.

Under the new rules, SEBI has increased the overall reservation for anchor investors to 40% from the earlier 33%.

Of this, 33% will be earmarked for mutual funds, while the remaining 7% will be allocated to insurers and pension funds. Any unsubscribed portion from the latter group will be reallocated to mutual funds.

Further, the regulator has raised the number of permissible anchor investors from 10 to 15 for IPOs with an anchor portion exceeding Rs 250 crore.

Thus, a minimum of 5 and a maximum of 15 investors shall be allowed for allocations up to Rs 250 crore. For every additional Rs 250 crore or part thereof, an additional 15 investors are to be permitted, subject to a minimum allotment of Rs 5 crore per investor, SEBI stated.

In the discretionary allotment category, SEBI has merged Category I (up to Rs 10 crore) and Category II (above Rs 10 crore and up to Rs 250 crore) into a single class for allocations up to Rs 250 crore. The new framework mandates a minimum of 5 and a maximum of 15 anchor allottees, with each receiving at least Rs 5 crore.

These changes will take effect from November 30, 2025, as part of the amended ICDR norms.

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