The minimum public shareholding (MPS) norms have forced Indian companies to come out  with mega IPOs. In a step to bring order into chaos, SEBI stipulated that the MPS of 25% for companies with market cap ₹50,000 crore to ₹1,00,000 crore will have to achieve the 25% MPS in 5 years instead of current 3 years. They can do a minimum public offer of ₹1,000 crore or minimum 8% of post-issue market cap as public offer. For the companies with market cap of over ₹5 trillion, MPO limit will be ₹15,000 crore.

For anchor issues up to ₹250 crore, it must have a minimum of 5 anchors and maximum of 15 anchors. Subsequently, for every ₹250 crore of anchor, up to 15 additional anchors will be allowed. The domestic anchor allocation has been raised from 33% to 40%, with the extra 7% being solely dedicated to LIC and to pension funds. The rather controversial proposal to cut the retail portion of the IPO from 35% to 25% is scrapped for now, which also removes the proposal to increase the QIB allocation from 50% to 60% at the bare minimum. Both are likely to broaden investor participation. 

The FPI holdings in Indian companies are at a multi-year low, so some boost to bring in more FPI investments were also on the cards. Currently, AIFs in an IFSC with a resident Indian sponsor can also register as an FPI. With AIFs, the meet also enhanced ease of doing the business by introducing a separate class of Accredited Investors (AI) only plans. This will also offer the benefits of lower levels of compliance requirement, so that the regulatory challenges do not become a roadblock. SEBI launched the dedicated India market website access for FPIs as a dedicated platform for the current and prospective FPIs. This will be a one-stop for all regulatory issues. 

Allowing participation of mutual funds in REITs and INVITs is key to enabling the products to get mass scale. Accordingly, SEBI will reclassify REITs as equity fund schemes and INVITs as hybrid schemes, which is in sync with the nature of their fund objectives. This is likely to boost the participation of mutual funds as well as Specialized Investment Funds (SIFs) into REITs and INVITs; broadening the investor base for these products. This is also broadly in alignment with global practices. Once that is done, investment in REITs by mutual funds will also fall under the permissible equity limits. This will make them eligible for inclusion in equity indices; pushing passive flows!