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Investing.com -- India’s market regulator has informed mutual fund managers that they cannot invest in companies before they officially list, according to a Reuters report on Friday.
The Securities and Exchange Board of India (SEBI) clarified that mutual funds are only permitted to make investments during the official IPO process, including early-stage anchor investments, but pre-IPO placements do not qualify as eligible investments.
Pre-IPO placements involve private sales of shares to select investors before a company officially launches its listing. In India, alternative investment funds and foreign investors are typically allowed to participate in these private sales.
The regulator expressed concern that if mutual funds invest in pre-IPO placements and the company ultimately fails to list, the funds would end up holding unlisted shares, according to the report.
This regulatory stance effectively limits mutual funds to participating only in the formal IPO process, while other types of investors retain the ability to access pre-IPO opportunities.
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