Anchor investor plays a vital role in the Indian capital market. Explain.

In July 2009, SEBI introduced an alternative IPO mechanism, referred to as the book building route with "anchor" investor. Anchor investor is the new concept introduced in the capital market. The anchor investor invests in an IPO before the offer opens to the public. The investors are got attracted to public offers before they hit the market to infuse a measure of confidence. The volume and value of the anchor subscriptions may serve as an indicator of the company's reputation and soundness of the offer. The concept could be explained as under: Anchor investors or cornerstone investors (as they are called globally) are marquee institutional investors like sovereign wealth funds, mutual funds and pension funds that are invited to subscribe for shares ahead of the IPO to boost the popularity of the issue and provide confidence to potential IPO investors. The benefit for institutional investors applying in anchor quota is that they get guaranteed allotment. Allotment to investors applying in an IPO depends on the number of times the issue gets subscribed. Anchor investors, however, cannot sell their shares for a period of 30 days from the date of allotment as against IPO investors who are allowed to sell on listing day. Roping in anchor investors gives a lot of comfort to the issuer and banker, as nearly a third of the IPO gets covered even before the opening day.