The Securities and Exchange Board of India said mutual funds cannot participate in pre-IPO share placements. In a letter addressed to the industry body Association of Mutual Funds in India (AMFI), reviewed by ET, the capital markets regulator directed these asset managers to invest only in the anchor investor portion or the public issue of an initial public offering (IPO). Sebi cited Clause 11 of the Seventh Schedule of the SEBI (Mutual Funds) Regulations, 1996, which says, "All investments by mutual fund schemes in equity shares and equity-related instruments must be made only in securities that are listed or to be listed."