How different is QIB from anchor investor?

An Anchor investor is a QIB (Qualified Institutional Buyer). However, the eligibility and role of an anchor investor in an IPO is different-

1. An anchor investor needs to invest more than Rs 10 crore.
2. The bid price and bidding window for anchor investors are different. They bid early than the normal QIBs.
3. Anchor investors can get up to 60% of the QIB allocation.
4. Anchor investors cannot sell their shares before 30 days of the allotment.
5. Anchor investors bid for shares within the price band declared by the company. On the allotment day, the company decides the share price. If the allotment price is higher than what paid by anchor investors, then they have to pay the shortfall. with more funds. But, if the price is lower, then the excess amount is not refunded to the anchor investors.

As the name suggests, anchor investors lead the bidding process. Their participation or lack of it gives reliable signals to other investors. If an IPO gets strong anchor investors then it encourages other investors to apply in the IPO and vice versa.