10 November 2025
SEBI Amends Framework Relating to Anchor Investors in the Book Building Process
 
The Securities and Exchange Board of India (SEBI) on 1 November 2025 has notified the SEBI (Issue of Capital and Disclosure Requirements) (Third Amendment) Regulations, 2025, further amending the SEBI (ICDR) Regulations, 2018. The amendment primarily relates to the framework governing Anchor Investors in Initial Public Offerings (IPOs) aiming to diversify the anchor investor base and enhance participation from long-term institutional investors such as insurance companies and pension funds. The amendments will come into effect 30 days from the date of publication in the Official Gazette.

What Has Changed

Provision Area Pre-Amendment Post-Amendment
Anchor Investor Portion - Overall Limit Up to 60% per cent of the portion available for allocation to QIBs Unchanged - 60% limit retained.
Reservation within Anchor Portion (40%) 33.33% of anchor investor portion reserved for domestic mutual funds 40% of the anchor portion reserved as follows:
  • 33.33% for domestic mutual funds;
  • 6.67% for life insurance & pension funds.
Unsubscribed portion in (ii) may be reallocated to mutual funds. (The 60% rule as the outer limit of the QIB portion for anchor investors stays).
Number of Anchor Investors
Allocation up to INR 100 million Maximum 2 anchor investors permitted. Deleted. The INR 100 million tier has been removed; structure now begins from up to INR 2500 million level.
Allocation above INR 100 million and up to INR 2500 million Minimum 2 and maximum 15 anchor investors, subject to INR 50 million minimum per investor. Minimum 2 and maximum 15 anchor investors retained (for up to INR 2500 million), without the INR 100 million tier.
Allocation above INR 2500 million For the first INR 2500 million: Minimum 5 and maximum 15 anchor investors;

Additional 10 investors for every additional INR 2500 million or part thereof. 		For first INR 2500 million: min 5, max 15 investors;

For every additional INR 2500 million: additional 15 investors, subject to INR 50 million minimum each.
Our Comments

The amendments for number of anchor investors relates only to public issue on the main board. In relation to the number of anchor investors, the amendment removes the INR 100 million tier, while also changing the additional investor limit from 10 to 15 to enhance flexibility in larger IPOs.

The new 40% reservation split ensures balanced participation between mutual funds and long-term investors such as insurers and pension funds. The 60% cap on the QIB portion available for anchor investors continues unchanged, maintaining equilibrium between early institutional commitment and wider QIB participation.

Issuers and lead managers should reassess anchor allocation plans, documentation, and investor outreach in light of the new framework. For upcoming IPOs, the effective date of board approval would generally determine the applicability of the revised norms.
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