Sebi frames new rules for anchor investors

Font Size

Print

Feedback

Email

Discuss

Related Articles

Bourses allowed to extend trading hoursSebi wants listed cos to provide more infoNew Sebi norms may jinx Bharti-MTN deal

New Delhi: Market regulator Securities and Exchange Board of India (Sebi) has made it mandatory to have atleast two anchor investors for an issue size up to Rs 250 crore and five investors for an issue size exceeding Rs 250 crore. Further mutual funds will be allowed to subscribe to up to one third of the portion reserved for anchor investor.

The decision to allow an anchor investor in a public issue was taken by the market regulator in its last board meeting held on June 18, 2009 as a measure directed to revive and boost confidence among the investors in the primary market.

According to it, out of the portion available for allocation to Qualified Institutional Buyers (QIB) in a public issue, up to 30% will be allocated to anchor investo with a lock-in period of 30 days.

Sebi has made necessary changes to Sebi (DIP) guidelines to implement the new norms. A circular issued by the regulator on Thursday said, “ Allocation to anchor investors shall be on a discretionary basis subject to minimum number of two investors for allocation up to Rs 250 crore and five investors for allocation of more than Rs 250 crore”.

“Allowing more than one anchor investor will reduce the possibility of any single investor acting in league with the promoter group to make the issue get subscribed,”, said Prithvi Haldea – member of Sebi’s Primary Market Advisory Committee (PMAC).

Further Sebi amendment to its DIP guidelines also makes it compulsory for listing an IPO on atleast one stock exchange with nation wide trading terminals.

These amended guidelines shall be applicable where draft offer documents for public issues are filed with Sebi on or after the date of this circular and incase where Sebi has not yet issued its observation on draft red herring prospectus already filed with the regulator.

The new guidelines state that an unlisted company making an IPO shall list the securities being issued through the IPO on atleast one stock exchange having nationwide trading terminals. “Such listing provides an active trading platform to investors from all across the country in securities of the company,” said Sebi.