Anchor investors in an IPO

Anchor investors are qualified institutional buyers (QIBs) that SEBI allows to invest in a main board IPO before the public issue opens. QIBs include mutual funds, insurance companies, pension funds, foreign portfolio investors, banks and similar large institutions. Each anchor must meet a minimum cheque size set by SEBI (₹5 crore for smaller anchor portions since late 2025, ₹10 crore or more in older rules).

They are called anchors because their early commitment is meant to hold the issue steady. When well-known funds buy in before the public does, other investors take it as a sign that professionals looked at the numbers and agreed with the price. That is a signal, not a guarantee. Institutions can be wrong.

The anchor book opens and closes one working day before the issue opens to the public. The company and its bankers choose the anchors and decide how many shares each gets, at a price within the announced band, usually the top of the band. Unlike public bidding, the allocation is at the discretion of the company and bankers, though SEBI sets rules on how it is done.

The company then files an allotment note on the exchanges, listing the anchors and their share counts. This is why news reports on the evening before an IPO name the funds that put money in and how much. If the final issue price turns out higher than the anchor price, the anchors must pay the difference. If it is lower, they do not get a refund.

Anchors can be allotted up to 60% of the QIB portion of the issue. Since November 2025, 40% of the anchor portion is reserved for domestic funds: 33% for mutual funds and 7% for insurers and pension funds, so that local institutions get a fair chance. For a company that qualifies under the profit route, the QIB portion is up to half of the issue, so anchors can take up to roughly 30% of the whole offer. For loss-making companies listing under the other route, the QIB portion is at least 75%, which makes the anchor share much larger.

For an anchor portion up to ₹250 crore, the number of anchor investors is capped at 15, and larger portions allow more. These counts and ratios come from SEBI's ICDR Regulations and have been revised recently. As of October 2026, check the RHP of any specific IPO for the exact numbers.

Anchors cannot sell right away. SEBI's rules, which apply to issues opening on or after 1 April 2022, split the shares into two halves. Half is locked in for 30 days from the date of allotment. The other half is locked in for 90 days from the date of allotment. The clock starts at allotment, not at listing.

Before this change, the lock-in was a flat 30 days. The 90-day part was added so that anchors stay invested for longer and cannot quickly exit once the stock lists. The expiry dates are published by the exchanges and often appear in business news, because a block of shares becoming free to sell can move the price.

Anchors give a company two things. The first is certainty. If a big part of the book is filled before the public opens, the company knows the issue is unlikely to fail. The second is credibility. Seeing long-term investors take big positions can encourage retail and non-institutional bidders.

For startups that have been loss-making, anchors are especially useful because the institutional portion is so large. A weak institutional response can make the whole issue struggle.

Anchor news is a data point, not a buy signal. Check who the anchors are and how diversified they are. A mix of Indian mutual funds, insurers and global long-only funds is different from a book where a few names took most of the allocation. Also remember that anchors get the shares at the top of the band, so they may be sitting on a loss if the listing is weak.

The better step is to read the RHP and judge the business, price and use of funds for yourself. Do not treat the presence of a famous fund as proof the price is fair.

SEBI has looked at how anchors are chosen because the company and bankers hold the discretion. SEBI's rules require disclosure of the allocation and bar the company's own promoters and related parties from taking part in the anchor book. The 2022 change in lock-in followed concerns that some anchors sold within weeks of listing.

This guide is general information and not investment, legal or tax advice. Check with a qualified professional before making decisions.