The Securities and Exchange Board of India has proposed a revamp of the share-allocation framework for initial public offerings, aiming to ensure higher participation and transparency in large public issues.
Under the proposed rules, for IPOs below Rs 5,000 crore, at least 35% of the offer must be reserved for retail investors. For larger IPOs, retail investors would continue to get 35% of the first Rs 5,000 crore, while 10% of the portion exceeding Rs 5,000 crore must also be allocated to them. However, SEBI has clarified that retail participation in any IPO cannot fall below 25% of the total issue.
SEBI has also introduced changes to anchor investor norms in larger issues. For IPOs above Rs 250 crore, there must be a minimum of five and a maximum of 15 anchor investors for the first Rs 250 crore. For every additional Rs 250 crore, 10 more anchor investors may be added. Each anchor investor must receive a minimum allotment of Rs 5 crore.
In a move to deepen institutional participation, SEBI has proposed that mutual funds receive at least 15% of the qualified-institutional-buyer portion, up from the current 5%.
SEBI has also suggested that any under-subscribed portion in retail or non-institutional categories may be redistributed to other investor classes.
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