SEBI is considering allocating a higher quota for mutual funds in IPOs and FPOs of equity shares
Mumbai: SEBI is considering allocating higher quota for mutual funds in public offer of equity shares, according to a PTI report carried by several newspapers.
The move is being considered to increase participation of retail investors in equity, the report said quoting unidentified senior industry official. SEBI feels mutual funds need to have larger allocation in a public offer as retail investors largely invest in equity schemes.
Thirty-five per cent of a public offer is reserved for retail investors. Increasing the reservation for retail investors might not help as the subscription for retail portion in a public offer is lower compared to institutional investors, the official said.
Mutual funds do not get substantial allotment in initial public offers (IPOs) or follow-on public offers (FPOs) as greater preference is given to foreign institutional investors. Only 5 per cent of the shares on offer in an IPO or FPO are reserved for mutual funds. The overall reservation for institutional investors, including mutual funds, is 50 per cent.
