Mumbai: Capital market regulator Securities and Exchange Board of India, or Sebi, on Thursday amended its disclosure and investor protection guidelines to include the concept of anchor investors in initial public offerings (IPOs) through the book-building process, which is used to determine the issue price.
Sebi’s board approved the concept of anchor investors in June to boost the primary markets.
Primary rules: The Bombay Stock Exchange in Mumbai. According to the new Sebi norms, only qualified institutional buyers such as banks are eligible to become anchor investors. Ashesh Shah / Mint
According to the new norms, only qualified institutional buyers (QIBs) are eligible to become anchor investors and will get up to 30% of the equity reserved for QIBs. Under current rules, 50% of the IPO size is reserved for QIBs.
Allocation of shares to anchor investors will be on a discretionary basis “subject to minimum number of two investors for allocation of up to Rs250 crore and five investors for allocation of more than Rs250 crore,” Sebi said in a statement.
The merchant banker for an issue will have to notify the number and price of shares allocated to anchor investors before the opening of the public issue.
The anchor investors will have to pay a margin of at least 25% on application and the balance within two days of the closure of the issue.
“If the price fixed for the public issue through book-building process is higher than the price at which the allocation is made to anchor investors, the additional amount shall be paid by the anchor investors,” Sebi said. “However, if the price fixed for public issue is lower than the price at which the allocation is made to anchor investors, difference shall not be payable to the anchor investors.”