Stock-market / Stock Market / Anchor Investor
An anchor investor, also known as a cornerstone investor, is an institutional investor invited to subscribe for shares ahead of an initial public offering (IPO). The purpose is to enhance the attractiveness of the IPO, instill confidence among potential investors, and secure a commitment from reputable investors.
Key Points:
- Anchor investors are typically institutional entities such as sovereign wealth funds, mutual funds, and pension funds.
- They subscribe for shares in a pre-IPO placement, often at a price determined before the IPO.
- Anchor investors may receive guaranteed allotment but are usually subject to a lock-in period during which they cannot sell the allotted shares.
The buyback of shares and the involvement of anchor investors are financial strategies aimed at managing the company's capital structure, enhancing shareholder value, and ensuring a successful market entry in the case of an IPO.
