A new SEBI analysis of 242 IPOs reveals that anchor investors, particularly foreign portfolio investors, sell about half their allocated shares within one year of listing. This selling activity is more intense in smaller IPOs and often leads to temporary downward pressure on stock prices near lock-in expiry dates.
A recent study by the Securities and Exchange Board of India (SEBI) has shed light on the trading behavior of anchor investors following Initial Public Offerings (IPOs). The analysis, which covered 242 mainboard IPOs listed between April 2022 and October 2025, shows that these large investors sell approximately 50% of their total allocation within one year of the company’s stock market debut.
FPIs and Smaller IPOs Face Higher Churn
The study highlights a notable difference in behavior between different types of anchor investors. Foreign Portfolio Investors (FPIs), who often hold a significant portion of anchor allotments, have been more aggressive in exiting their positions compared to domestic mutual funds. By the one-year mark, FPIs had sold nearly 60% of their anchor shares, whereas mutual funds retained a larger share of their investments, exiting roughly 38%.
Furthermore, the size of the IPO appears to influence the speed of these exits. Smaller companies, specifically those with an issue size of up to ₹250 crore, saw the highest rate of selling. Anchor investors in these smaller offerings offloaded 72.5% of their holdings within a year. In contrast, larger IPOs with issue sizes between ₹1,001 crore and ₹2,500 crore experienced more moderate exit rates, around 40.8%. This trend suggests that investors may approach smaller IPOs with a shorter-term outlook compared to larger, more established public offerings.
Impact on Stock Prices
The selling behavior of anchor investors has direct consequences for the broader market, particularly around the time lock-in periods expire. Anchor investors typically face a phased lock-in period for their shares. The study observed that when more than 10% of the anchor-held portion is sold around the time these lock-in periods end, the stock price often experiences a short-term decline. Data from the study indicates that these stocks saw an average price drop of about 3.5% in the days following the lock-in expiry, suggesting that heavy selling creates temporary supply pressure that exceeds market demand.
For investors, these findings underscore the importance of monitoring lock-in calendars and anchor investor composition. Understanding that a significant portion of anchor stock may hit the market within the first 30 to 90 days after listing can help in managing expectations regarding stock volatility. While this selling is a standard part of market dynamics, the intensity of exits—especially in smaller companies—can be a key factor in short-term price movements. Moving forward, the concentration of FPI holdings and the size of the IPO will likely remain important indicators for those tracking potential selling pressure in the post-listing phase.