SEBI Shakes Up IPO Game: Retail Investor Quota Slashed to 25% in Major Overhaul

Regulators just flipped the script on India's IPO gold rush—and retail investors got a haircut.

SEBI's new draft proposal axes the retail allocation from 35% to 25%, squeezing out the little guy to make room for institutional whales. Because nothing says 'market democratization' like handing more power to fund managers with offshore accounts.

The move comes as Indian markets hit record highs—coincidentally, just in time for investment banks to pocket bigger fees from deep-pocketed clients. Retail traders who piled into recent IPOs like Paytm and Zomato? Left holding smaller slices of an increasingly speculative pie.

One cynical take: When regulators talk 'leveling the playing field,' check whose hands are tilting the table.

Anchor investor pool to expand for larger IPOs

To encourage broader institutional participation, SEBI has also proposed expanding the anchor investor framework. For IPOs with anchor allocations above ₹250 crore, the number of permissible anchor investor allottees may be increased, a MOVE aimed at facilitating participation by foreign portfolio investors managing multiple funds.

Further, SEBI recommended including insurance companies and pension funds in the reserved category of the anchor investor portion, alongside mutual funds. It suggested raising the reservation for life insurers, pension funds, and domestic mutual funds from 30 per cent to 40 per cent of the anchor book. One-third of this WOULD remain earmarked for mutual funds, while 7 per cent would be carved out for insurers and pension funds.

Published on July 31, 2025