Anchor investors
- January 11, 2022
- Posted by: OptimizeIAS Team
- Category: DPN Topics
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Anchor investors
Subject – Economy
Context – Anchor investor exits, Paytm shares spiral to hit all-time low
Concept –
- Anchor investors are institutional investors who are allotted shares just before an IPO opens for subscription.
- All anchor investors are bound by a lock-in period since they get a confirmed allotment of a company’s shares.
Who are Anchor Investors?
- Institutional investors, like retail investors, have the option to start bidding for an IPO-bound company’s shares when it opens for subscription.
- In addition, institutional investors also have an option to bid for shares at a pre-determined price band a day before the IPO opens for subscription.
- In such a scenario, these institutional investors are termed as anchor investors.
What is lock-in period for anchor investors?
- Anchor investors are guaranteed an allotment of shares a day before the IPO subscription process starts.
- Since they already acquire shares before the IPO subscription process, they are bound to hold the shares during the lock-in period and are not allowed to sell them before that.
- At present, the shares issued to anchor investors are locked in for a period of 30 days from the date of allotment. While market regulator Securities and Exchange Board of India (Sebi) has proposed a longer lock-in period of 30 days, the present duration continues to be 30 days.
- The lock-in period disallows anchor investors from suddenly selling shares, preventing fluctuations in share value for a limited period of time after a company is listed in the primary markets.