Reviewed on 24 Oct 2026 · Source: IPO Bulletin explainer; checked against SEBI ICDR Regulations 2018 (as amended); figures can change with SEBI circulars
An anchor investor is a large institutional investor, such as a mutual fund, insurance company or foreign fund, that agrees to buy shares in an IPO a day before the issue opens to the public. Under SEBI rules, up to 60% of the portion reserved for qualified institutional buyers can be set aside for anchors, and each anchor must bid at least Rs 10 crore in a mainboard issue. The shares are allotted to them at a price decided before the issue opens, and that price is disclosed in the announcement. Anchors help the company because their names and bids show other investors that serious institutions have already taken a position. To discourage quick flipping, the shares allotted to anchors carry a lock-in: half is locked for 30 days and the rest for 90 days from allotment. When these lock-ins end, a large number of shares can become tradable at once, and the stock sometimes drops around those dates. Retail investors cannot be anchors, but the anchor list and amount are good context for judging demand.
Example: An issue raises Rs 500 crore, with 50% reserved for qualified institutions. Up to 60% of that portion, Rs 150 crore, can go to anchors the day before opening. Those anchors cannot sell half their shares for 30 days.
An anchor investor is a large institutional investor, such as a mutual fund, insurance company or foreign fund, that agrees to buy shares in an IPO a day before the issue opens to the public. Under SEBI rules, up to 60% of the portion reserved for qualified institutional buyers can be set aside for anchors, and each anchor must bid at least Rs 10 crore in a mainboard issue. The shares are allotted to them at a price decided before the issue opens, and that price is disclosed in the announcement. Anchors help the company because their names and bids show other investors that serious institutions have already taken a position. To discourage quick flipping, the shares allotted to anchors carry a lock-in: half is locked for 30 days and the rest for 90 days from allotment. When these lock-ins end, a large number of shares can become tradable at once, and the stock sometimes drops around those dates. Retail investors cannot be anchors, but the anchor list and amount are good context for judging demand.
Allotment is the step after an IPO closes in which the company decides who receives shares and how many. Once bidding ends, the registrar prepares the basis of allotment, which explains how the shares were shared between categories and applicants. If an issue is not oversubscribed in a category, most valid applicants get what they asked for. If it is oversubscribed, shares are rationed. In the retail category, successful applicants are chosen by a computerised lottery and each winner usually receives one lot, because the demand is far larger than the supply. Larger categories receive shares in proportion to their bids. After allotment, shares are credited to the demat accounts of successful applicants, and money for unsuccessful applications is released from the ASBA block. SEBI requires the whole process, from issue close to listing, to be completed within three working days. You can check your allotment status on the registrar's website using your application number, PAN or demat details, and on the exchange page for the issue.
A bid is an investor's offer to buy a specified number of shares in an IPO at a price within the announced price band. In a book-built issue, you submit a bid through your broker, your bank's net banking or a UPI-enabled app, stating the quantity in lots and either a specific price or the cut-off option. A bid can be revised upward or downward, or cancelled, while the issue is open, and a revised bid replaces the earlier one. Each bid is recorded in the exchange's order book, and the totals across all prices form the book from which the final price is discovered. The amount blocked for a bid is the number of shares multiplied by the highest price at which you bid, so bidding at the cap blocks the largest sum. If the final price is lower, the extra is released. Only one bid per category per PAN is generally allowed, with bids from the same PAN in the same category treated as duplicates. Bids placed by retail investors on the last day are accepted until the exchange cut-off, typically 5 pm, though UPI approval for the mandate needs to be completed within the same window.
Worked example
An issue raises Rs 500 crore, with 50% reserved for qualified institutions. Up to 60% of that portion, Rs 150 crore, can go to anchors the day before opening. Those anchors cannot sell half their shares for 30 days.
