SEBI Board Meet (Sept 2025): Key Regulatory Changes in MPS, IPO Rules, FPIs, and MF Access to REITs

The Securities and Exchange Board of India (SEBI) held its board meeting on 12 September 2025 and announced important changes across Minimum Public Shareholding (MPS), IPO allocations, Foreign Portfolio Investor (FPI) access, and mutual funds’ participation in REITs and InvITs. These updates influence how companies raise capital, how investors participate in issues, and how global capital flows into Indian markets.

Rationalizing MPS Norms

The Minimum Public Shareholding (MPS) rule requires at least 25% public shareholding. SEBI has eased timelines and offered clearer routes for large issuers.

• For companies with market cap ₹50,000 crore to ₹1,00,000 crore, the time to reach 25% MPS is now 5 years (earlier 3 years).
• They may opt for a minimum public offer (MPO) of ₹1,000 crore or a minimum 8% of post-issue market cap.
• For companies with market cap over ₹5 trillion, the MPO limit is ₹15,000 crore.

What this means for investors/markets

• Less pressure for “rush” mega IPOs; smoother, phased dilution.
• More balanced IPO pipeline and pricing stability over time.

Facilitating the IPO Process

SEBI refined anchor and allocation norms to broaden participation and support book stability.

• For anchor issues up to ₹250 crore: minimum 5 and maximum 15 anchors.
• For every additional ₹250 crore: up to 15 additional anchors allowed.
• Domestic anchor allocation raised from 33% to 40%; the extra 7% reserved solely for LIC and pension funds.
• The proposal to cut the retail quota from 35% to 25% has been scrapped; the plan to lift QIB to 60% is also dropped.

What this means for investors/markets

• Retail participation preserved at current levels.
• Stronger domestic anchor base (LIC, pensions) adds stability and confidence.
• Wider, more inclusive allocation across categories.

Ease of Business for FPIs

To revive FPI participation and simplify access, SEBI announced new pathways and resources.

• AIFs in IFSC with a resident Indian sponsor can register as FPIs.
• Introduction of Accredited Investor (AI)-only plans with lower compliance burden.
• A dedicated India market website for FPIs as a one-stop regulatory access and information hub.

What this means for investors/markets

• Simpler, faster market access for global investors.
• Lower friction and improved transparency can support steady capital inflows.

Mutual Funds in REITs and InvITs

SEBI moved to mainstream REITs/InvITs within mutual fund categories and align with global practice.

• REITs to be reclassified as equity fund schemes.
• InvITs to be treated as hybrid schemes, reflecting their portfolio nature.
• MF investment in REITs will fall under permissible equity limits, enabling potential index inclusion and passive flows.

What this means for investors/markets

• Broader access to real estate and infrastructure via mutual funds.
• Deeper investor base for REITs/InvITs and improved liquidity.
• Potential long-term boost to capital formation in real assets.

Conclusion: Why This SEBI Meet Matters

SEBI’s September 2025 decisions balance market development, investor protection, and ease of doing business. Smoother MPS timelines, inclusive IPO allocations, clearer FPI pathways, and MF participation in REITs/InvITs can broaden India’s market base and support long-term capital formation.

Investors should track implementation timelines, MF product changes for REITs/InvITs, and IPO calendars shaped by the updated anchor and allocation rules.

FAQs

Q: What is the new SEBI rule on MPS for large companies?
A: Firms with market cap of ₹50,000 crore to ₹1,00,000 crore have 5 years to reach 25% public shareholding, with an MPO of ₹1,000 crore or 8% of post-issue market cap. Over ₹5 trillion market cap: ₹15,000 crore MPO.

Q: Has SEBI reduced the retail quota in IPOs?
A: No. The proposal to cut retail from 35% to 25% is scrapped. QIB minimum will also not rise to 60%.

Q: How are FPIs being helped?
A: AIFs in IFSC with a resident sponsor can register as FPIs, AI-only plans reduce compliance, and a dedicated FPI web portal offers one-stop regulatory access.

Q: Can mutual funds now invest more easily in REITs/InvITs?
A: Yes. REITs are treated as equity schemes and InvITs as hybrid, allowing MF participation within equity limits and enabling potential index inclusion.

Disclaimer: This article is for informational purposes only and does not constitute financial, legal, or investment advice. Please consult qualified professionals for advice specific to your situation.