Roadshow
An IPO roadshow is the series of pre-issue investor meetings and presentations conducted by a company's management and lead bankers to institutional investors in the days before the public offer opens, with the objective of gauging investor interest, building an order book for the book-building process, and allocating shares to anchor investors up to one day before the IPO opens.
The roadshow is a critical component of the book-building process in an IPO. It is the primary channel through which the company's management — typically the CEO, CFO, and sometimes the promoters — directly communicates the investment thesis to the most important category of investors: Qualified Institutional Buyers (QIBs), which include domestic mutual funds, insurance companies, banks, and foreign portfolio investors (FPIs). The roadshow bridges the gap between the written disclosures in the DRHP and the nuanced, forward-looking understanding that institutional investors need to commit large sums.
A typical mainboard IPO roadshow in India lasted two to five days and involved back-to-back one-on-one meetings with fund managers, group presentations to larger investor audiences in major financial centres (typically Mumbai, and sometimes Delhi, Bengaluru, and Chennai for domestic institutions; and London, New York, Singapore, and Hong Kong for global FPIs), and sometimes informal lunches or dinners. The management presentation covered the company's business model, competitive differentiation, financial history, growth strategy, and key risks — largely echoing the DRHP but with the added dimension of live Q&A that enabled institutional investors to probe management quality, execution track record, and strategic clarity.
Importantly, roadshow meetings cannot involve disclosures of material non-public information that would go beyond what is in the DRHP. SEBI's insider trading regulations and the ICDR Regulations require that all material information about the company be disclosed in the offer document; roadshow presentations are intended to explain and elaborate on the disclosed information, not to introduce new material facts that would be unavailable to the public.
The anchor investor allocation is a distinct pre-IPO institutional allocation that is technically separate from but closely linked to the roadshow. Under SEBI's ICDR Regulations, up to 60% of the QIB portion of the IPO can be allocated to 'anchor investors' one day before the public offer opens. Anchor investors are a select group of large institutional investors who commit to subscribe at the determined price before the public subscription begins, providing a price signal and validation signal to the broader market. Their lock-in period is 30 days (for 50% of their anchor allocation) and 90 days (for the remaining 50%), providing a degree of post-listing stability. Anchor allocations are disclosed publicly after the anchor allotment, showing which domestic and foreign institutions participated and at what price.
The roadshow outcome — whether the institutional book was oversubscribed during the roadshow (a process called 'soft-circling') — influenced the final pricing decision. If demand from institutional investors significantly exceeded supply at the initial indicative price range, bankers might price at or near the top of the price band; if demand was tepid, the final price might be set toward the lower end of the band to ensure full subscription.