SEBI Board Meet: Insurance firms, pension funds get more room in anchor book of IPOs
SEBI chairman Tuhin Kanta Pandey
The board of the Securities and Exchange Board of India (SEBI) has given its go-ahead to changes in the anchor investor allocation mechanism by creating more room for insurance companies and pension funds while also increasing the number of permissible anchor investors in a public issue.
“Life Insurance Companies registered with IRDAI and Pension Funds registered with PFRDA have been included in the reserved category of anchor portion, alongside domestic Mutual Funds,” stated the SEBI press release issued post the board meeting.
“The overall reservation for the anchor portion has been increased from one-third to 40%. Of this, one-third will continue to be reserved for domestic Mutual Funds, while remaining will be reserved for Life Insurance Companies and Pension Funds. In case of undersubscription in the reserved portion for Life Insurance Companies and Pension Funds, the unsubscribed part will be available for allocation to domestic Mutual Funds,” it added.
Further, the number of permissible anchor investor allottees for allocations above Rs 250 crore has been increased. “Thus, a minimum of 5 and a maximum of 15 investors shall be allowed for allocations up to Rs 250 crore. For every additional Rs 250 crore or part thereof, an additional 15 investors are to be permitted, subject to a minimum allotment of Rs 5 crore per investor,” stated the release.
In a consultation paper issued in July, the regulator had proposed including insurance companies and pension funds in the reserved category of anchor portion along with mutual funds. It had further proposed increasing the reservation from existing 33 per cent to 40 per cent of the anchor investor portion for life insurance companies registered with IRDAI and pension funds registered with PFRDA and domestic mutual funds.
“Provided that one-third of the anchor investor portion shall be reserved for domestic mutual funds, and the remaining 7% shall be reserved for Insurance companies and Pension Funds. In case of undersubscription by Insurance Companies/Pension Funds in the 7% reservation for them, the unsubscribed portion of such reservation shall be available to domestic Mutual Funds,” the SEBI consultation paper had stated.
In terms of the number of anchor investors, the regulator had suggested increasing the number of permissible anchor investor allottees for allocations above Rs 250 crore.
“Specifically, a minimum of 5 and a maximum of 15 investors shall be allowed for allocations up to Rs 250 crore. For every additional Rs 250 crore or part thereof, an additional 15 investors instead of 10 may be permitted, subject to a minimum allotment of Rs 5 crore per investor,” the SEBI paper had stated.