Anchor investors

An IPO has a private round inside it. It happens a day before the public bidding, at a price the public has not yet seen, and it is disclosed in full — which makes it both an advantage some investors have and a piece of information everyone gets.

What an anchor investor is

An institution allocated shares before the issue opens, in the anchor investor portion carved out of the institutional category. The rules are specific, and all of these are from SEBI's General Information Document, read 30 September 2026.

A minimum bid of ₹10 crore. Anchors are large by definition.

Up to 60% of the institutional category, allocated by the issuer on a discretionary basis. That word is the exception to chapter 6's rule that allotment has no discretion in it. For anchors — and only anchors — the issuer and its bankers choose who gets shares.

One-third of the anchor portion reserved for domestic mutual funds, subject to valid bids at or above the anchor allocation price.

No withdrawing, no reducing. Anchors "cannot withdraw their Bids or lower the size of their Bids … at any stage after the Anchor Investor Bid/Offer Period", and they pay the bid amount when they submit.

And one asymmetry worth noticing: if the final offer price comes in below the anchor allocation price, the excess the anchors paid "shall not be refunded to them". An anchor can end up having paid more per share than the public did, with no recourse. If the offer price is higher, they pay the difference.

What an anchor allocation does and does not signal

The reasonable inference, and it is a weak one: institutions with resources looked at this and committed money at a price, irrevocably, before anyone else. That is a real commitment and better evidence than an opinion.

Now the qualifications, each of which matters.

The issuer chose them. Discretionary allocation means the anchor list is partly a selection by the seller. A book full of investors known to be supportive is a different signal from a competitive one, and you cannot tell which you are looking at from the list alone.

Institutions are wrong regularly. Chapter 6 of the equity subject applies unchanged here. A fund buying at the IPO price may be buying for mandate reasons, for exposure, or because it expects to sell in a month.

Some of them can sell in a month. Which is the next section, and the part most often left out of the commentary.

The dual lock-in

Before 2022 anchor shares were locked in for thirty days. SEBI reviewed it, and the amendment to Schedule XIII of the ICDR regulations reads:

There shall be a lock-in of 90 days on the 50% of the shares allotted to the anchor investors from the date of allotment and a lock-in of 30 days on the remaining 50% of the shares allotted to the anchor investors

SEBI's own reasoning for the split, from the board memorandum: it "will ensure that all Anchor Investors are locked-in for longer period (90 days) partly and at the same they will be able to partly exit after 30 days." It applies to issues that opened after 1 April 2022.

So the anchor book is not a vote of long-term confidence. It is a commitment of which half is free to leave after one month.

Why that matters for the price

Put it together with the listing. Shares list at T+3. Thirty days later, half of a block that could be up to 60% of the institutional category becomes sellable. Ninety days later, the rest does.

Those are two dates on which supply can arrive without anything happening to the business. They are knowable in advance — the allotment date is published, the percentages are in the document — and they are a better-founded reason for a price move a month after listing than most of the explanations offered at the time.

This is the supply-calendar habit that chapter 11 extends to the promoters, whose lock-ins run in years rather than days.

Reading the anchor list

It is published, usually as an advertisement before the issue opens, and it repays five minutes:

Domestic mutual funds against foreign funds. One-third of the portion is reserved for domestic funds. Whether foreign long-only funds, hedge funds or sovereign funds took the rest tells you something about who is holding it and for how long.

Concentration. A handful of names taking the whole book is a different structure from thirty names sharing it.

Names you recognise as long-term holders. Weak evidence, but not no evidence.

The size against the total issue. Anchor portion as a percentage of the whole offer is the number that matters for the supply calendar, not as a percentage of the institutional category.

The point

Anchors bid at least ₹10 crore, can be given up to 60% of the institutional portion at the issuer's discretion, pay upfront and cannot withdraw. Half their shares are free after thirty days and the rest after ninety — so the anchor book is a commitment with a published expiry date.