Understanding the "Anchor Investor" Impact on IPOs

Have you ever noticed a massive subscription on "Day 0" of an IPO? This is the work of Anchor Investors—large institutional buyers like mutual funds and insurance companies who are allowed to bid for shares one day before the public issue opens. Their participation is a "vote of confidence" that can set the tone for the entire subscription period. If top-tier funds like SBI Mutual Fund or LIC join as anchors, it signals that the smart money is comfortable with the price.\n\nAnchor investors are required to commit a minimum of ₹10 crore, and they must hold their shares for at least 30 to 90 days post-listing. This "lock-in" period prevents them from immediately dumping shares if the stock lists at a premium. For a retail investor, checking the list of anchor investors in the RHP can help distinguish between a "hype" IPO and a "quality" business backed by serious capital.\n\nHowever, anchor interest is not a guarantee of success. There have been instances where anchor-backed IPOs failed to deliver listing gains because the broader market turned bearish on the listing day. Furthermore, if the anchor portion is only filled by "lesser-known" funds, it might indicate that the primary big-ticket institutions found the valuation too expensive.\n\nTechnically, the anchor portion is carved out of the Qualified Institutional Buyer (QIB) category, and up to 60% of the QIB portion can be allocated to anchors. This reduces the number of shares available for other QIBs, often leading to massive oversubscription in the institutional category on Day 3. This scarcity can further drive up the Grey Market Premium (GMP).\n\nIn conclusion, studying the anchor list is a pro-level move for IPO investors. It provides a glimpse into the institutional sentiment and valuation acceptance. As we head into the mega-IPOs of 2026, pay close attention to which global funds are anchoring issues like Reliance Jio or PhonePe, as their presence will be a key indicator of long-term stability.