SEBI Revamps Anchor Investor Rules to Boost Domestic Institutional Participation in IPOs
The Securities and Exchange Board of India (SEBI) has announced a major revamp of the share-allocation framework for anchor investors in initial public offerings (IPOs), with the goal of encouraging greater participation from domestic institutional investors such as mutual funds, insurance companies, and pension funds.
Higher Allocation for Domestic Institutions
Under the revised norms, total reservation in the anchor portion has been increased from 33% to 40%.
This allocation will now comprise:
33% reserved for mutual funds, and
7% reserved for insurers and pension funds.
If the 7% quota for insurance and pension funds remains unsubscribed, SEBI has clarified that it will be reallocated to mutual funds.
The new structure aims to strengthen long-term institutional participation and broaden the domestic investor base in IPOs.
Increase in Number of Anchor Investors
To further improve market depth and reduce concentration risk, SEBI has also expanded the permissible number of anchor investors for IPOs where the anchor portion exceeds ₹250 crore.
“A minimum of 5 and a maximum of 15 investors shall be allowed for allocations up to ₹250 crore. For every additional ₹250 crore or part thereof, an additional 15 investors are to be permitted, subject to a minimum allotment of ₹5 crore per investor,” SEBI stated in its notification dated October 31.
Previously, the maximum number of anchor investors allowed per ₹250 crore was limited to 10, which SEBI has now increased to 15 — a move expected to improve diversification within large IPO allocations.
Simplified Allotment Categories
In another structural change, SEBI has merged the two existing discretionary categories under the anchor portion:
Category I: up to ₹10 crore
Category II: above ₹10 crore up to ₹250 crore
These have been combined into a single unified category for allocations up to ₹250 crore, with the same minimum (5) and maximum (15) investor participation limits and a minimum allotment size of ₹5 crore per investor.
Effective Date and Broader Implications
The revised framework comes into effect from November 30, 2025, through an amendment to SEBI’s Issue of Capital and Disclosure Requirements (ICDR) Regulations.
The reform is designed to enhance participation from long-term, stable domestic investors, reducing overreliance on foreign institutional anchors and aligning IPO participation with India’s growing pool of domestic savings through MFs, insurers, and pension funds.
Market experts believe these changes will increase liquidity, transparency, and institutional discipline in the IPO process — strengthening confidence among retail investors and deepening India’s capital markets ecosystem.
For detailed insights on SEBI’s evolving IPO regulations and their implications for institutional participation, explore analyses from Ranjit Jha (CEO) — a thought leader in financial-market reforms and wealth strategies.
To understand how anchor investor frameworks and IPO participation rules impact long-term wealth creation, connect with Rurash Financials — experts in capital markets, investment advisory, and structured wealth management.