TBO Tek IPO: Anchor Allocation at 44.91%

About the TBO Tek IPO

The stock of TBO Tek IPO has a face value of ₹1 per share and the price band for the book building IPO has been set in the range of ₹875 to ₹920 per share. The IPO of TBO Tek Ltd will be a combination of a fresh issue of shares and offer for sale (OFS) component. The fresh issue portion of the IPO of TBO Tek Ltd comprises the issue of 43,47,826 shares (43.48 lakh shares approximately), which at the upper price band of ₹920 per share will translate into a fresh issue size of ₹400 crore. The offer for sale (OFS) portion of the IPO of TBO Tek Ltd comprises the sale / offer of 1,25,08,797 shares (125.09 lakh shares approximately), which at the upper price band of ₹920 per share will translate into an OFS size of ₹1,150.81 crore.

Out of the OFS size of 125.09 lakh shares, a total of 3 promoter shareholder will be selling 52.12 lakh shares. In addition, 2 investor selling shareholders will offer the balance 72.97 lakh shares in the offer for sale (OFS). Thus, TBO Tek IPO will comprise of a fresh issue and an OFS of 1,68,56,623 shares (168.57 lakh shares approximately) which at the upper end of the price band of ₹920 per share aggregates to total issue size of ₹1,550.81 crore. The IPO of TBO Tek Ltd will be listed on the NSE and the BSE on the IPO mainboard.

The fresh funds will be used for expanding the supplier and buyer base, adding new lines for amplification of business, inorganic growth, and data monetization. The promoter stake currently stands at 51.26%, which will dilute post the IPO. The IPO will be lead managed by Axis Capital, Jefferies India, Goldman Sachs, and JM Financial; while KFIN Technologies Ltd will be IPO registrar.

Read more about TBO Tek IPO

A brief on the anchor allocation of TBO Tek IPO

The anchor issue of TBO Tek IPO saw a relatively strong response on 07th May 2024 with 44.91% of the IPO size getting absorbed by the anchors. Out of 1,68,56,623 shares (168.57 lakh shares approximately) on offer, the anchors picked up 75,70,807 shares (75.71 lakh shares approximately) accounting for 44.91% of the total IPO size. The anchor placement reporting was made to the BSE late on Tuesday, 07th May 2024; one working day ahead of the IPO opening on Wednesday, 08th May 2024.

The entire anchor allocation was made at the upper end of the price band of ₹920 per share. This includes the face value of ₹1 per share plus a share premium of ₹919 per share, taking the anchor allocation price to ₹920 per share. Let us focus on the anchor allotment portion ahead of the TBO Tek Ltd IPO, which saw the anchor bidding opening and also closing on 07th May 2024. Post the anchor allocation, here is how the overall allocation looked.

Here it must be noted that the 75,70,807 shares allocated to the anchor investors on 07th May 2024, were actually reduced from the original QIB quota; and only the residual amount would be available to QIBs in the IPO. That change has been reflected in the table above, with the QIB IPO portion reduced to the extent of the anchor allocation. As a result, the QIB quota has reduced from 74.86% before the anchor allocation to 29.95% after the anchor allocation. The overall allocation to QIBs includes the anchor portion, so the anchor shares allotted has been deducted from the QIB quota for the purpose of the public issue.

Finer points of anchor allocation process

Before we go into the details of the actual anchor allotment, a quick word on the process of anchor placement. The anchor placement ahead of an IPO/FPO is different from a pre-IPO placement in that the anchor allocation has a lock-in period of just one month, although under the new rules, part of the anchor portion will be locked in for 3 months. It is just to give confidence to investors that the issue is backed by large established institutions. It is the presence of institutional investors like mutual funds and foreign portfolio investors (FPIs) that gives confidence to the retail investors. Here are details of the anchor lock-in for the issue of TBO Tek Ltd.

However, the anchor investors cannot be allotted shares at a discount to the IPO price. This is explicitly stated in the SEBI revised regulations as under, “As per the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirement) Regulations, 2018, as amended, in case the Offer Price discovered through book building process is higher than the Anchor Investor Allocation Price, then the Anchor investors will be required to pay the difference by the pay-in as specified in the revised CAN.

An anchor investor in an IPO is normally a qualified institutional buyer (QIB) like a foreign portfolio investor or mutual fund or insurance company or a sovereign fund which invests before the IPO is made available to the public as per SEBI regulations. Anchor portion is part of the public issue, so the IPO portion to the public (QIB portion) is reduced to that extent. As initial investors, these anchors make the IPO process more attractive for investors, and instil confidence in them. Anchor investors also largely aid in price discovery of the IPO

Anchor allocation investors in TBO Tek IPO

On 07th May 2024, TBO Tek Ltd completed the bidding for its anchor allocation. There was a strong and robust response as the anchor investors participated through the process of book building. A total of 75,70,807 shares were allotted to a total of 47 anchor investors. The allocation was done at the upper IPO price band of ₹920 per share (including premium of ₹919 per share) which resulted in an overall anchor allocation of ₹696.51 crore. The anchors have already absorbed 44.91% of the total issue size of ₹1,550.81 crore, which is indicative of fairly robust institutional demand.

Listed below are the 23 anchor investors who, have been allotted 2% or more of the anchor allocation done ahead of the IPO of TBO Tek Ltd. The entire anchor allocation of ₹696.51 crore was spread across a total of 47 major anchor investors, with only 23 anchor investors getting more than 2% each out of the anchor allocation quota. While there were 47 anchor investors in all, only the 23 anchor investors who got allocated 2% or more each of the anchor quota are listed in the table below. These 23 anchor investors accounted for 76.94% of the total anchor collection of  ₹696.51 crore. The detailed allocation is captured in the table below, indexed descending on size of anchor allocation.

Data Source: BSE Filings (Value Allocated in ₹ in Crore)

The above list only includes the set of 23 anchor investors who got allotted shares of 2% or above each of the anchor portion done ahead of the TBO Tek Ltd IPO. In fact, there were 47 anchor investor in all; with only the anchor investors getting more than 2% each of the anchor quota being mentioned in the list above. The detailed and comprehensive report on the anchor allocation with the mutual fund portion separated can be accessed by clicking on the link below.

https://www.bseindia.com/markets/MarketInfo/DownloadAttach.aspx?id=20240507-52&attachedId=133f4234-78b6-461a-92e9-0e2480083d02

The detailed report is available in PDF format and can be downloaded by clicking on the link above. Alternatively, readers can also opt to cut this link and paste in their browser, in case the link is not directly clickable. The details of the anchor allocation can also be accessed in the Notices section of the BSE on its website www.bseindia.com.

Overall, the anchors absorbed 44.91% of the total issue size. The QIB portion in the IPO has already been reduced to the extent of the anchor placement done above. Only the balance amount will be available for QIB allocation as part of the regular IPO. The general norm is that, in anchor placements, smaller issues find it hard to get FPIs interested while larger issues do not interest mutual funds. TBO Tek Ltd saw a good deal of buying interest from all category of anchors viz. FPIs, participatory notes routed through ODIs, domestic mutual funds, AIFs, and insurance companies. Let us finally look at the sub-category of mutual fund participation in the anchor allocation ahead of the TBO Tek Ltd IPO.

The anchor response normally sets the tone for the retail participation in the IPO and the anchor response has been fairly steady this time around. Out of the 75,70,807 shares allocated to the anchors in the IPO, a total of 31,55,236 shares were allocated to domestic mutual funds registered with SEBI. This allocation was spread across 26 mutual fund schemes belonging to 14 asset management company (AMCs). The mutual fund allocation in the anchor portion amounted to 41.68% of the total anchor size.

Key dates for TBO Tek IPO and how to apply?

The issue opens for subscription on 08th May 2024 and closes for subscription on 10th May 2024 (both days inclusive). The basis of allotment will be finalized on 13th May 2024 and the refunds will be initiated on 14th May 2024. In addition, the demat credits are expected to also happen on 14th May 2024 and the stock will list on 15th May 2024 on the NSE and the BSE. TBO Tek Ltd will test the appetite for such microfinance stocks in India. The credits to the demat account to the extent of shares allotted will happen by the close of 14th May 2024 under ISIN (INE673O01025)