Definition
Anchor Investor
Anchor investors are large institutional investors who are allotted IPO shares a day before the issue opens to the public, lending credibility to the offering.
Under SEBI rules, up to 60% of the QIB portion of a book-built IPO can be reserved for anchor investors, who bid in a separate process one working day before the public issue opens. Anchors must apply for a minimum of ₹10 crore and are typically mutual funds, insurers, sovereign wealth funds and FPIs.
The presence of well-known anchors signals confidence and helps build the book. Anchor allottees face a lock-in: half their shares are locked for 30 days and the rest for 90 days from allotment, which discourages immediate selling on listing.
Related terms
- Qualified Institutional Buyer (QIB)A QIB is a large, sophisticated institutional investor — such as a mutual fund, bank, insurer or FPI — that is allotted a dedicated portion of an IPO.
- Anchor Lock-inAnchor lock-in is the mandatory period for which anchor investors must hold their IPO shares before they can sell.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.