SEBI restricts mutual funds from pre-IPO investments under new compliance rule

India’s markets regulator SEBI has prohibited mutual fund houses from participating in pre-IPO placements, limiting them to public or anchor categories. The directive seeks to enhance transparency and prevent valuation distortions in unlisted securities. Fund managers must now disclose investment rationales for IPO-linked participation. Analysts said the move improves governance while potentially curbing aggressive pre-listing exposure. The change is part of SEBI’s broader effort to align retail protection standards with global norms, ensuring investor confidence in regulated fund instruments.