Sebi mulls reserving 25% of IPO for domestic mutual funds,
insurers
02/09/2014 17:26
The Securities and Exchange Board of India (Sebi) plans to make it mandatory for issuers to reserve 25 per cent of an initial public offering (IPO) for domestic mutual funds and insurers. But if they don't subscribe to their portion fully, the IPO could be considered a failure, said investment bankers briefed on the matter, reported media.
The regulator thinks that a higher participation of 25 per cent of the issue size or half of that slotted for qualified institutional bidders would enable a fairer valuation.
Besides, it will benefit both issuers and investors as these local institutional investors play the conservative card when it comes to pricing, aligning more with retail investors.
In recent weeks, the regulator has informally told merchant bankers handling the Inox Wind IPO to ensure that 25 per cent of the entire book is subscribed to by domestic institutional investors or else the issue can't be launched, the bankers said.
Currently, the issuer allots 50 per cent of the shares in an IPO to QIBs, which include overseas and domestic funds, 15 per cent to non-institutional investors, including high net worth individuals and corporates, and 35 per cent to retail investors.
02/09/2014 17:26
The Securities and Exchange Board of India (Sebi) plans to make it mandatory for issuers to reserve 25 per cent of an initial public offering (IPO) for domestic mutual funds and insurers. But if they don't subscribe to their portion fully, the IPO could be considered a failure, said investment bankers briefed on the matter, reported media.
The regulator thinks that a higher participation of 25 per cent of the issue size or half of that slotted for qualified institutional bidders would enable a fairer valuation.
Besides, it will benefit both issuers and investors as these local institutional investors play the conservative card when it comes to pricing, aligning more with retail investors.
In recent weeks, the regulator has informally told merchant bankers handling the Inox Wind IPO to ensure that 25 per cent of the entire book is subscribed to by domestic institutional investors or else the issue can't be launched, the bankers said.
Currently, the issuer allots 50 per cent of the shares in an IPO to QIBs, which include overseas and domestic funds, 15 per cent to non-institutional investors, including high net worth individuals and corporates, and 35 per cent to retail investors.
