Anchor investors in an IPO
Anchor investors are large institutions that commit to an IPO a day before it opens to the public. The anchor book is often reported as a signal of demand.
Who they are
Anchors are qualified institutional buyers, such as mutual funds, insurance companies and foreign portfolio investors, that apply for a large amount. Up to 60% of the QIB portion can be allocated to anchors, and part of that is reserved for domestic mutual funds.
They bid one working day before the issue opens, at a price within the band, and the allocation is announced before public bidding starts.
Lock-in
Anchors cannot sell immediately. Half of their shares are locked in for 30 days after allotment and the other half for 90 days. The dates when these lock-ins end are sometimes followed by selling pressure.
What it tells you
A strong anchor list shows that large investors were willing to commit money at that price. It does not guarantee listing gains or a good long-term investment; anchors have their own reasons and time horizons.
The anchor allocation reduces the QIB shares on offer to the public; it does not change the retail portion.
Related guides
- IPO categories explained: retail, HNI (NII) and QIB
- What is IPO subscription (times subscribed)?
- DRHP, RHP and prospectus: what to read before an IPO
- IPO lock-in periods explained
More on how ipos work
- IPO lot size, price band and cut-off price explained
- SME IPO vs mainboard IPO: what is different
- The shareholder quota in an IPO
- The employee quota in an IPO
- What is the HNI category in an IPO?
- What is book building 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.