The Securities and Exchange Board of India (SEBI) has announced major changes to the framework for anchor investor allocations in initial public offerings (IPOs), aiming to deepen domestic institutional participation and improve market transparency. Under the revised rules, the anchor portion has been raised to 40%, up from the previous 33%, with 33% reserved for mutual funds and 7% for insurance and pension funds. If the 7% portion remains unsubscribed, it will automatically be reallocated to mutual funds to ensure optimal utilization.
In a move to widen investor engagement, SEBI has also increased the number of eligible anchor investors for IPOs with anchor portions exceeding $28.2 million (Rs. 250 crore). The new rule allows between five and fifteen anchor investors for IPOs up to $28.2 million, with an additional 15 investors permitted for every extra $28.2 million or part thereof. Each investor must receive a minimum allocation of $0.56 million (Rs. 5 crore), ensuring balanced participation across investor groups.
Additionally, SEBI has simplified the categorization for anchor allocations by merging the earlier two tiers — Category I (up to $1.13 million) and Category II (above $1.13 million up to $28.2 million) — into a single category for IPOs valued up to $28.2 million. This consolidation is expected to make the process more streamlined and equitable for institutional investors.
The regulator stated that the enhanced framework will come into effect from November 30, 2025. According to SEBI, these reforms are designed to promote the active participation of long-term domestic investors such as mutual funds, insurers, and pension funds — all of which play a key role in stabilizing capital markets.
By boosting the anchor investor limit and expanding participation opportunities, SEBI aims to make IPOs more inclusive, transparent, and investor-friendly. The changes are also expected to increase the confidence of institutional players, strengthen the capital market ecosystem, and support sustainable market growth.
