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Reuters Photo Credit: Currently, commodities exchanges do not have a separate clearing corporation for contracts

SEBI relaxes IPO anchor investment norms

25 August, 2015

The capital markets regulator Securities and Exchange Board of India (SEBI) has removed the cap on the number of anchor investors who can participate in larger sized initial public offer (IPO) of companies.

Currently, the norms limit the number of anchor investor at 15 if the IPO size is under Rs 250 crore and this can go up to 25 if the issue size is over Rs 250 crore.

SEBI said that the requirement for the number of anchor investors for allocation of up to Rs 250 crore will remain the same but for issues above that size there could be 10 additional investors for every additional allocation of Rs 250 crore, subject to minimum allotment of Rs 5 crore per anchor investor.

This means if the issue size is around Rs 1,000 crore, there can be as many as 45 anchor investors.

An anchor investor refers to a qualified institutional buyer (QIB) who applies to invest in a company going public a day ahead of the issue opening. In 2009, SEBI had first introduced the concept of anchor investor in public issues. The key difference of QIBs investing in the IPO and those coming in as anchor investors is that, the latter are not bound by proportional allotment if the issue is oversubscribed but they have a share lock-in period of 30 days from the date of allotment in the public issue.

Typically mutual funds come in as anchor investors though this investor window has been tapped by sovereign wealth funds and PE funds too in the recent past.

The relaxation in anchor investor norms would allow firms to have a bigger portion of the issue covered with a diverse set of investors who, in effect, underwrite part of the issue.

Meanwhile, in another decision the securities market regulator has approved merger of Forward Markets Commission (FMC) with itself. While setting September 28 as the merger date, the capital market watchdog also announced new norms for the commodities derivatives market under which exchanges and brokers in this segment will need to comply with rules applicable to their stock market peers.

At present, commodities exchanges do not have a separate clearing corporation for contracts, a requirement under the SEBI Act.

Now, as per the new norms, while national commodity exchanges will require a net worth of at least Rs 100 crore by March 2017, regional stock exchanges have to confirm with the norms within three years of the merger.

The norms will also come into force from September 28, the date from which SEBI would start regulating the commodity derivatives market as a unified regulator. The norms once implemented will enhance in the functioning of the commodities derivatives market and its brokers under SEBI norms, apart from integration of commodities derivatives and securities trading in an orderly manner.


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SEBI relaxes IPO anchor investment norms

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