<p>With not many IPOs hitting the markets, Securities & Exchange Board of India (Sebi), may, on Thursday, assess whether a new entity, named anchor investors, be allowed to take part in the public offers to boost the sagging primary market.<br /><br />The Sebi board is likely to discuss the issue of anchor investors threadbare to spur the IPO (initial public offer) market, official sources said here.<br /><br />Data on public domain<br /><br />Anchor investors (AI) are long term investors and if the IPO issuer can find anchor investors, it indicates that the company enjoys good reputation and its public offer could be a success. According to a proposal to be discussed by Sebi, the number of shares allocated to AI and the price at which the allocation is made, would be made available in public domain by the merchant banker before opening of the issue for other classes of investors.<br /><br />It also said an AI would be required to pay a margin of 25 per cent on application with the balance 75 per cent to be paid within two days of the date of closure of the issue.<br />AI would be asked to bring in the additional amount if the price fixed for IPO is higher than paid by this new form of entity. As per a proposal to be discussed by Sebi board, 30 per cent of the portion for qualified institutional buyers in an IPO be reserved for anchor investors. At present, 50 per cent of IPO size is reserved for Qualified Institutional Buyers. <br /><br />Assist the issuers<br /><br />Some merchant bankers told Sebi that given the current state of affairs of the primary market, where the number of public issues have come down substantially, introduction of anchor investors may help the issuer to raise funds.<br /><br />While these kind of investors are particularly useful in uncertain markets, even in positive market conditions it can help to market small issues that otherwise find it difficult to generate adquate interest from investors by ensuring that there are investors to anchor the transaction, analysts said.</p>
<p>With not many IPOs hitting the markets, Securities & Exchange Board of India (Sebi), may, on Thursday, assess whether a new entity, named anchor investors, be allowed to take part in the public offers to boost the sagging primary market.<br /><br />The Sebi board is likely to discuss the issue of anchor investors threadbare to spur the IPO (initial public offer) market, official sources said here.<br /><br />Data on public domain<br /><br />Anchor investors (AI) are long term investors and if the IPO issuer can find anchor investors, it indicates that the company enjoys good reputation and its public offer could be a success. According to a proposal to be discussed by Sebi, the number of shares allocated to AI and the price at which the allocation is made, would be made available in public domain by the merchant banker before opening of the issue for other classes of investors.<br /><br />It also said an AI would be required to pay a margin of 25 per cent on application with the balance 75 per cent to be paid within two days of the date of closure of the issue.<br />AI would be asked to bring in the additional amount if the price fixed for IPO is higher than paid by this new form of entity. As per a proposal to be discussed by Sebi board, 30 per cent of the portion for qualified institutional buyers in an IPO be reserved for anchor investors. At present, 50 per cent of IPO size is reserved for Qualified Institutional Buyers. <br /><br />Assist the issuers<br /><br />Some merchant bankers told Sebi that given the current state of affairs of the primary market, where the number of public issues have come down substantially, introduction of anchor investors may help the issuer to raise funds.<br /><br />While these kind of investors are particularly useful in uncertain markets, even in positive market conditions it can help to market small issues that otherwise find it difficult to generate adquate interest from investors by ensuring that there are investors to anchor the transaction, analysts said.</p>