The concept of anchor investors in initial public offerings (IPOs) unveiled by the Securities and Exchange Board of India recently to revive the primary markets as well as boost the confidence of investors in the whole process has been notified on Thursday.
The market regulator amended its disclosure and investor protection guidelines.
Now, the issue price will be determined with the help of the concept of anchor investor through the book-building process.
According to the new rule it is mandatory to have at least two anchor investors for an issue size up to Rs 250 crore and five investors for an issue size exceeding Rs 250 crore. The allocation of shares will be on a discretionary basis.
And the entities that can become anchor investors are qualified institutional buyers (QIBs).
The participation of mutual funds in this process is limited to subscribing up to one-third of the portion reserved for anchor investors.
The anchor investor concept allows Qualified Institutional Buyers (QIB) in a public issue, to subscribe up to 30 per cent with a lock-in period of 30 days.
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