Anchor Investor
Anchor Investor is a large institutional investor who invests in an IPO one day before it opens to the public.
An Anchor Investor is a type of Qualified Institutional Buyer (QIB) who invests a significant amount of money in an IPO before it becomes available to retail investors. Their investment happens one day before the IPO opens, helping set confidence in the market.
These investors are usually big institutions like:
Mutual funds
Banks
Insurance companies
Foreign investors
They invest large amounts (generally ₹10 crore or more in mainboard IPOs) and are allotted shares at a fixed price decided during the IPO process.
Anchor investors play an important role because their participation:
Creates trust and confidence among retail investors
Signals that the company has been evaluated by experts
Helps generate early demand for the IPO
There are also some rules for anchor investors:
They cannot change or cancel their bids once submitted
They must pay the full amount upfront
Their shares are subject to a lock-in period (partly 30 days, partly 90 days)
Example:
Suppose a company is launching an IPO. One day before it opens, a large mutual fund invests ₹50 crore as an anchor investor. Seeing this, retail investors feel more confident and are more likely to apply for the IPO.