SEBI's new 40% rule for IPOs: An explainer

The market regulator, SEBI, has recently introduced a major change to the IPO framework.

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The portion reserved for anchor investors has been increased from 33% to 40% to attract larger and more professional investors. This move is seen as a key step toward strengthening investor confidence in India’s primary market. Under the new rules, SEBI has raised the total allocation for anchor investors from the current 33% to 40%. This reform aims to encourage long-term and stable capital participation in IPOs. Out of the 40% quota, 33% will be reserved for mutual funds, while the remaining 7% will be allocated to insurance companies and pension funds. If the 7% portion reserved for insurance companies and pension funds is not fully subscribed, the unutilised portion will be reallocated to mutual funds. This flexibility ensures that no allocation remains idle and the capital is used effecti