The Hindu Business Line : Retail investors can invest up to Rs 1 lakh in IPOs

NOW retail investors will be able to invest up to Rs 1 lakh in the initial public offers of companies. The Securities and Exchange Board of India has amended the Disclosure and Investor Protection Guidelines to increase the value of investments by retail investors from Rs 50,000 to this new level.

Further, the market regulator had also amended the rule to increase the allocation of retail investors in book-built issues to 35 per cent from the existing 25 per cent.

The portion of non-institutional investors has, therefore, been reduced to 15 per cent from 25 per cent in order to make this change possible.

In case, the book-built issues are made following the requirement of mandatorily allocating 60 per cent to qualified institutional buyers (QIBs), then the retail investors will be allocated 30 per cent and non-institutional investors, the remaining 10 per cent.

The bidding period for the initial public offers has also been reduced to 3-7 days. Currently, book-building issues can be bid for 5-10 days, with an extension of three days, in case of price revisions.

The guidelines have further been modified to allow issuers an option to announce the price band through an announcement one day before the bid opening. The existing guidelines require all issuers, making a public issue through book building process to disclose the price band or the floor price in the Red Herring Prospectus.

Data display of book building issues on Web sites of stock exchanges will be made uniform. Information on Web sites will also be retained for three days after the closure of the bids.

SEBI announced that these amendments would be in effect from April 4, 2005.

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Retail investors can invest up to Rs 1 lakh in IPOs