SEBI Considers Bigger Institutional Role in SME IPOs
India’s markets regulator SEBI is considering changes that could give institutional investors a larger role in initial public offerings by small companies, according to sources familiar with the discussions. The proposals could bring several requirements for SME listings closer to those followed by larger companies, including institutional allocations and higher eligibility thresholds.
Under the proposed framework, up to 50% of an SME share issue could be reserved for qualified institutional buyers, while 35% could go to retail investors and 15% to non-institutional investors. The regulator is also considering allowing anchor investors to receive a portion of the institutional allocation, along with changes to profit and market-capitalisation requirements for companies seeking to list on SME platforms.
The potential reforms come amid concerns over governance and the use of funds raised through SME public offerings. Small companies raised about $1.2 billion through more than 250 offerings in 2025, while roughly 100 offerings have raised less than half that amount so far in 2026. SEBI chief Tuhin Kanta Pandey had earlier said that rules governing small-company listings were under review.
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