The Securities and Exchange Board of India has stopped mutual funds from investing in pre-IPO placements, sources told NDTV Profit.
The fund houses will only be able to invest in the anchor investor portion or the public issue of an IPO.
This has been conveyed by the market watchdog to the Association of Mutual Funds in India, the persons privy to the development said.
SEBI has cited rules allowing investment only in listed or to-be-listed securities. Several funds later had sought clarity on whether pre-IPO placements qualify.
SEBI, however, warned that such investments could leave funds with unlisted shares if IPOs are delayed or cancelled.
The market regulator’s move “will slow down pre-IPO placements”, an investment banker advising on IPOs said.
(This is a developing story)
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