The Securities and Exchange Board of India (SEBI) has prohibited mutual fund schemes from taking part in pre-IPO share placements, restricting their participation to the anchor investor segment or the public issue of an Initial Public Offering (IPO), reported Moneycontrol .

In a communication to the Association of Mutual Funds in India (AMFI), SEBI referred to Clause 11 of the Seventh Schedule of the SEBI (Mutual Funds) Regulations, 1996, which specifies that mutual funds can invest in equity shares or related instruments only if they are listed or intended to be listed.

The regulator clarified that the move follows multiple industry queries about whether mutual funds could invest in shares allotted before the anchor or public issue opens.

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