Anchor boost for IPOs

The Securities and Exchange Board of India's move to double the anchor investor quota has benefited several initial public offerings (IPOs). Anchor investors are institutional investors such as mutual funds, insurance companies and sovereign wealth funds that are allotted shares, on a discretionary basis, a day before the IPO opens . Issuers can allot up to 60 per cent of shares reserved for these qualified institutional buyers (QIB), up from 30 per cent earlier, in an IPO. As half (or 75 per cent in some cases) of the IPO is reserved for QIBs, an issuer can raise nearly 30 per cent of the IPO from anchor investors. "The increased anchor book is positive for bankers and issuers as it sets the tone for the IPO. Investors can also take cues looking at the anchor investor list," says a banker. Anchor investors, however, have to observe a 30-day lock-in from the date of allotment.