What the terms mean
The two words are often used as synonyms, but in practice they differ. A cornerstone investor signs a binding agreement, before the prospectus is published, to buy shares worth a set amount at the final IPO price, whatever that price turns out to be. Its name and commitment appear in the prospectus. An anchor investor is a broader term: a large investor that places an early, often large order in the book and helps set the tone of the offer, sometimes with a firm commitment and sometimes with an indication only.
Both are different from a pre-IPO investor. A pre-IPO investor buys before the IPO at a private price. A cornerstone investor buys in the IPO, at the IPO price, and usually gets no discount and no special rights, only a guaranteed allocation.
Why issuers want them
- Demand certainty: part of the offer is covered before the roadshow, which reduces the risk of a failed book in a weak market.
- Price signal: a respected name buying at the IPO price supports the valuation in conversations with other institutions.
- Investor quality: long-term holders reduce selling pressure after the listing.
- Deal size: cornerstones allow a larger offer than the open book alone would support.
The cost for the issuer is less flexibility. A large part of the offer is allocated in advance, so fewer shares remain for price discovery in the book, and some institutions dislike an offer that looks pre-sold.
Gulf sovereign funds and family offices
In the Gulf, the typical cornerstone or anchor is a state-linked investor: a sovereign wealth fund, a government investment company, a state pension fund or a group controlled by a ruling family. Large family offices and regional conglomerates play a similar role. These investors often take part in local IPOs on DFM, ADX and Saudi Exchange, and some invest in listings abroad, including Hong Kong.
For a foreign issuer, interest from such an investor usually depends on more than valuation: a link to the local economy, plans for regional operations, a holding structure in ADGM or DIFC, and governance that meets international standards. The talks are long and personal, and they are usually run by the global coordinators of the IPO.
Cornerstones on HKEX and in the Gulf
| Point | HKEX | Gulf exchanges (DFM, ADX, Saudi Exchange) |
|---|---|---|
| Practice | Long-established, many IPOs include cornerstones | Common in larger IPOs, often state-linked investors |
| Price | Final IPO price, no preferential terms | Usually final IPO price |
| Disclosure | Names, amounts and lock-up in the prospectus | Names and commitments disclosed in the prospectus |
| Lock-up | Fixed lock-up for cornerstones under HKEX practice | Set by the cornerstone agreement; DFM and ADX rules have no mandatory lock-up |
| Allocation rules | Since 4 August 2025 at least 40% of the offer goes to the bookbuilding tranche | Tranches for institutions and retail set in the prospectus |
On HKEX, the revised allocation rules of August 2025 require at least 40 percent of the offer to go to the bookbuilding tranche, which limits how much of a deal can be covered in advance. Controlling shareholders of HKEX issuers are also restricted: under Rule 10.07 they may not dispose of shares for 6 months after listing and, for the next 6 months, may not sell so as to lose control.
Lock-up of anchors
Cornerstone investors normally accept a lock-up: they cannot sell the allocated shares for an agreed period after listing. The lock-up is what gives their participation weight in the eyes of other investors. Its source differs by venue. On some markets it follows from the rules or regulatory guidance, on others it is a term of the cornerstone agreement. Saudi CMA rules, for example, lock substantial shareholders named in the prospectus for 6 months on the Main Market, while DFM and ADX rules do not set a mandatory lock-up, so the period is contractual.
Disclosure in the prospectus
Because a cornerstone commitment affects how the offer is priced and allocated, it is disclosed in the prospectus. Investors in the book expect to see the identity of each cornerstone, the amount or number of shares, the lock-up, any relationship with the company or its shareholders, and confirmation that no side benefits were given. Any extra right, such as a board seat or a commercial agreement, may be treated as preferential and can block the cornerstone status.
For the issuer this means that conversations with potential cornerstones should be run through the banks and recorded properly from the first meeting. Information given to a cornerstone before the prospectus is published must later appear in the prospectus, otherwise other investors would be at a disadvantage. This article is part of the Eurasia Consulting Group educational guide for issuers.