IPO lock-in periods explained
Shares you get in an IPO allotment have no lock-in: you can sell them on listing day. Several other shareholders, though, are locked in for a while.
Promoters
Promoters must keep a minimum contribution, generally 20% of the post-issue capital, locked in for 18 months from allotment (longer, three years, when the money raised goes mainly into capital spending). Promoter holdings above that minimum are generally locked in for six months.
Pre-IPO shareholders
Other shareholders who held shares before the IPO, such as private equity funds, are generally locked in for six months after allotment, with some exemptions set out in SEBI's rules.
Anchor investors
Anchors cannot sell half their shares for 30 days after allotment and the other half for 90 days.
Why it matters
When a large lock-in ends, many shares become free to sell at once. Prices sometimes weaken around these dates, so they are worth knowing if you hold a newly listed share. The offer document lists who is locked in and until when.
Related guides
- Anchor investors in an IPO
- DRHP, RHP and prospectus: what to read before an IPO
- What happens on IPO listing day
More on how ipos work
- IPO lot size, price band and cut-off price explained
- SME IPO vs mainboard IPO: what is different
- IPO categories explained: retail, HNI (NII) and QIB
- The shareholder quota in an IPO
- The employee quota in an IPO
- What is the HNI category in an IPO?
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Information, not investment advice. GMP is an unofficial grey-market indicator; figures come from public sources (InvestorGain) and may be late or wrong. Not registered with or affiliated to SEBI, the exchanges, the registrars or InvestorGain.