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Full money upfront mandatory for QIPs in IPOs – SEBI

June 15, 2009

In a bid to make a level playing field in favour of retail investors, the Securities and Exchange Board of India (SEBI) has finally geared to make full payments upfront mandatory for qualified institutional investors (QIPs) when they apply for shares in initial public offers (IPOs). On the other hand, retail investors are required to pay the full amount with their applications. As of now, QIPs are required to pay only 10% of the amount required for the shares for which they apply upfront.

SEBI has focused on a better price discovery since retail investors are inclined to be influenced by QIP participation. The proposal was on the back seat for a year due to the crunch in the IPO market. As the markets have started recovering, SEBI has now decided to implement it.

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