SEBI Increased Anchor Allocation to 40% in IPO to Strengthen Participation by DIIs

The capital markets regulator, SEBI, has revised rules governing share allocation for anchor investors in initial public offerings (IPOs), aiming to enhance participation from domestic institutional investors (DIIs) such as mutual funds, insurance companies, and pension funds.

Increased Anchor Allocation

Under the new framework, the total allocation for anchor investors has been raised to 40% from the previous 33%. Of this, 33% is earmarked for mutual funds, while the remaining 7% is reserved for insurers and pension funds. SEBI has clarified that if the 7% allocation for insurers and pension funds is not fully subscribed, it will be transferred to mutual funds. This update was outlined in a notification dated October 31.

Simplified Discretionary Allotments

In addition, SEBI has increased the number of anchor investors allowed for IPOs with an anchor portion exceeding ₹250 crore. The previous limit of 10 investors per ₹250 crore has now been raised to 15. According to SEBI, “A minimum of 5 and a maximum of 15 investors shall be permitted for allocations up to ₹250 crore. For every additional ₹250 crore or part thereof, an extra 15 investors can be included, with a minimum allotment of ₹5 crore per investor.”

The regulator has also simplified discretionary allotments under the anchor portion by merging Category I (up to ₹10 crore) and Category II (above ₹10 crore up to ₹250 crore) into a single category for allocations up to ₹250 crore. This consolidated category will allow between 5 and 15 anchor investors, with a minimum allotment of ₹5 crore each.

Also Read: SEBI Urges Digital Platforms to Tackle Fraudulent Investment Activities

Objective and Implementation

SEBI expects the revised framework to encourage greater participation from long-term institutional investors in IPOs. To implement these changes, the regulator has amended the ICDR (Issue of Capital and Disclosure Requirements) norms, which will come into effect on November 30.

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