With an aim to increase retail investors’ participation in stock market, Sebi is considering higher allocation of public offer shares for mutual funds. Initial and follow-on public offers have traditionally been a preferred route of stock market investment for mutual funds, but they do not get enough shares these days because of a surge in demand from foreign institutional investors.
Currently, all the Qualified Institutional Buyers (QIBs), which includes a whole range of institutional investors including mutual funds, are together allocated 50 per cent of shares being sold through IPOs and FPOs. But, there is no direct reservation for mutual funds (MFs).
The maximum indirect allocation available to mutual funds as per the existing regulations is not even 10 per cent, and intense competition in the QIB segment makes it tough for MFs to get desired amount of shares, a senior official said.