Adani Enterprises FPO gets 29.92% Anchor Allocated

The anchor issue of Adani Enterprises FPO saw a robust response on 25th January 2023 with 29.92% of the FPO size getting absorbed by the anchors. Out of the 6,10,50,061 shares on offer, the anchors picked up 1,82,68,925 shares accounting for 29.92% of the total FPO size. The anchor placement reporting was made to the BSE late on Wednesday. The FPO of Adani Enterprises Ltd opens on 27th January 2023 in the price band of Rs.3,112 to Rs.3,276 and will close for subscription on 31st January 2023 (both days inclusive). Normally, the anchor allocation is done a day ahead of the FPO opening, but 26th January being a holiday, it has been completed on the 25th January itself. The entire anchor allocation was made at the upper price band of Rs3,276. At the time of bidding, anchors have paid 50% of the price (Rs1,638), with the balance payable on allotment. Let us focus on the anchor allotment portion ahead of the Adani Enterprises Ltd FPO.

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-FPO 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.

However, the anchor investors cannot be allotted shares at a discount to the FPO 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 FPO 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 FPO is made available to the public as per SEBI regulations. Anchor portion is part of the public issue, so the FPO portion to the public (QIB portion) is reduced to that extent. As initial investors, these anchors make the FPO process more attractive for investors, and instil confidence in them. Anchor investors also largely aid in price discovery of the FPO, but more importantly, they give confidence to the retail investors.

Anchor placement story of Adani Enterprises Ltd FPO

On 25th January 2023, Adani Enterprises Ltd completed the bidding for its anchor allocation. There was an enthusiastic response as the anchor investors participated through the process of book building. A total of 1,82,68,925 shares were allotted to a total of 33 anchor investors. The allocation was done at the upper FPO price band of Rs.3,276 (50% payable upfront and 50% on allotment) which resulted in an overall allocation of Rs5,984.90 crore. The anchors have already absorbed 29.92% of the total issue size of Rs20,000 crore, which is indicative of the robust institutional demand.

Listed below are the 23 anchor investors who got allotted at least 1% of the total anchor allocation individually. The entire anchor allocation of Rs.5,984.90 crore was substantially spread across these 23 major anchor investors. These top 23 anchor investors listed below accounted for 93.94% of the total anchor allocation of Adani Enterprises Ltd FPO.

Data Source: BSE Filings

While the GMP has remained stable around Rs75 per share, it shows a relatively subdued premium of 2.29% on listing. This has led to reasonable anchor response with the anchors taking in 29.92% of the total issue size. The QIB portion in the FPO will be 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 FPO.

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. Adani Enterprises Ltd has been a mix, getting good response from FPIs but it has also got extremely strong response from the domestic insurance companies, while the mutual funds have been conspicuous by their absence in the anchor bidding. The number and spread of the Foreign Portfolio Investors has been fairly healthy in this case. Some big names including Maybank Securities, Abu Dhabi Investment Authority, Goldman Sachs, Morgan Stanley, Nomura Singapore, Dovetail Global Fund, Jupiter Fund, Citigroup Global Markets Societe Generale, LIC, SBI Life and HDFC Life were among the key anchor investors participating in the Adani Enterprises Ltd FPO.

Also read: Adani Enterprises FPO GMP (Grey Market Premium)

Out of the total 1,82,68,925 shares allotted by way of anchor placement, Adani Enterprises Ltd allotted a nothing to the domestic mutual fund schemes. The domestic institutional participation came largely from the insurance companies.