SEBI Expands Institutional Participation in IPOs, Reserves 40% Anchor Quota for Domestic Investors [Read Notification]
SEBI has eased IPO rules by allowing more anchor investors, reserving 40% of the anchor quota for Indian institutions like mutual funds, insurers, and pension funds, and clarifying their eligibility.
The Securities and Exchange Board of India (SEBI) has issued the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) (Third Amendment) Regulations, 2025 through Notification dated October 31, 2025, introducing major changes to the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018. The new rules will come into force 30 days after their publication in the Official Gazette.
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Key Highlights of the Amendment
1. More Flexibility for Institutional Investors in IPOs
SEBI has made it easier for a larger number of institutional investors, known as anchor investors, to participate in public issues (IPOs).
- For IPOs up to Rs. 250 crore, there must be at least 2 and not more than 15 anchor investors, and each investor must receive a minimum allotment of Rs. 5 crore.
- For IPOs above Rs. 250 crore, there should be at least 5 anchor investors and up to 15 investors for every additional Rs. 250 crore of issue size, with each still investing at least ₹5 crore.
This change allows more big investors to take part in IPOs, leading to wider participation and a more diversified investor base.
2. 40% Quota Reserved for Indian Institutions
Out of the total shares reserved for anchor investors, SEBI has now earmarked 40 percent specifically for Indian institutional investors.
This 40 percent quota will be divided as follows:
- 33.33% for domestic mutual funds
- 6.67% for life insurance companies and pension funds
If the life insurance and pension fund portion is not fully subscribed, the remaining shares will go to domestic mutual funds.
3. Clearer Definition of Domestic Institutions
SEBI has defined which entities qualify as domestic institutional investors to remove confusion:
- A Life Insurance Company must be registered with the Insurance Regulatory and Development Authority of India (IRDAI) under the Insurance Act, 1938.
- A Pension Fund must be registered with the Pension Fund Regulatory andDevelopment Authority (PFRDA) under the PFRDA Act, 2013.
These definitions bring more clarity about which institutions can participate under the reserved quota and ensure transparency in IPO allocation.
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