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Sebi approves concept of anchor investor in IPOs

This article was posted on Jun 18, 2009 and is filed under Market News

The Securities and Exchange Board of India (SEBI) Chairman, C B Bhave on Thursday approved the concept of anchor investor (AI). The new entity will be allowed to take part in the public offers to give the required boost to the primary market.

During the board meet, it was also decided that anchor investor will get up to 30 per cent of the QIB portion. As reported by NDTV Profit on June 16, Sebi has also allowed lock-in period of 30 days after the issue is approved.

“The steps taken by SEBI are within their power and the regulator should have taken these steps earlier. The move would be appreciated by the investors and the government. The lock-in period for anchor investor is a very innovative scheme, which would bring justification to prices,” said HP Ranina, a corporate lawyer.

The SEBI board also decided to do away with entry load for mutual fund schemes. It is up to mutual funds to determine the commission payable to the distributors, the board said, adding that the distributors must disclose commission for mutual fund schemes.

“AMCs may have to absorb some expenses connected with marketing on funds. We don’t see much margin impact by changes in MF load. With this investor can get funds at a cheaper rate,” said TP Raman, MD, Sundaram BNP Paribas Mutual Fund.

Commenting on the Sebi board decision, Amitabh Chakraborty, president of equities at Religare Securities, said: “The steps taken by Sebi will make transaction costs lower for the retail investors. As result of this the markets will become more accessible for all players.”

The IPO issuer finding an AI would mean the good reputation the company enjoys in the market.


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