Anchor Investor Allocation and Key Details for Interarch Building Products IPO

About Interarch Building Products IPO

The anchor allocation for Interarch Building Products Limited was made at the upper end of the price band of ₹900 per share. This includes the face value of ₹10 per share plus a share premium of ₹890 per share, taking the anchor allocation price to ₹900 per share. The anchor allotment portion ahead of the Interarch Building Products Limited IPO saw the anchor bidding opening and closing on August 16, 2024, just before the IPO.

A Brief on the Anchor Allocation of Interarch Building Products IPO

The anchor issue of Interarch Building Products IPO saw a robust response on 16th August 2024, with approximately 29.90% of the total IPO size being absorbed by anchor investors. Out of the 6,669,852 shares on offer, the anchors picked up 1,994,288 shares, accounting for ₹179.49 crore of the total IPO size. The anchor placement reporting was made to the BSE late on 16th August 2024, three working days ahead of the IPO opening on Monday, 19th August 2024.

The anchor allocation was made at the upper end of the price band of ₹900 per share. This includes the face value of ₹10 per share plus a share premium of ₹890 per share, taking the anchor allocation price to ₹900 per share. The anchor allotment portion of the Interarch Building Products Limited IPO, which saw anchor bidding open and close on 16th August 2024, demonstrates strong investor confidence ahead of the IPO.

After the anchor allocation, the overall allocation looked solid, setting a positive tone for the public offering. The lock-in period for 50% of the anchor shares will end on 21st September 2024, while the remaining shares will be locked until 20th November 2024. This structured allocation and the lock-in strategy aim to ensure stable post-listing performance for Interarch Building Products Limited on the BSE and NSE.
 

Notably, the 1,994,288 shares allocated to the anchor investors on 16th August 2024 were reduced from the original QIB quota, and only the residual amount will be available to QIBs in the IPO. This change has been reflected in the table above, with the QIB IPO portion reduced to the extent of the anchor allocation. Consequently, the QIB quota has decreased from its original allocation before the anchor allocation to the reduced percentage after the anchor allocation. The overall allocation to QIBs includes the anchor portion, so the allotted anchor shares have been deducted from the QIB quota for the public issue.

Finer Points of the Anchor Allocation Process

Before diving into the specifics of the anchor allotment for Interarch Building Products Limited, it's crucial to understand the process of anchor placement. Anchor placement is a key step ahead of an IPO or FPO that sets the stage for investor confidence. Unlike a pre-IPO placement, anchor allocation has a lock-in period, albeit shorter.

The standard lock-in period for anchor investors is just one month, but recent regulations mandate that a portion of the anchor allotment will remain locked in for three months. This step is designed to bolster confidence among retail investors, signalling that large, established institutions back the issue. The involvement of institutional investors like mutual funds and foreign portfolio investors (FPIs) lends significant credibility to the IPO.

Shares cannot, however, be distributed to anchor investors below the IPO price. According to the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirement) Regulations, 2018, as amended, if the Offer Price found through the book-building process is higher than the Anchor Investor Allocation Price, the Anchor investors will be required to pay the difference by the pay-in as specified in the revised CAN. This is explicitly stated in the SEBI revised regulations.

An anchor investor in an initial public offering (IPO) is typically a qualified institutional buyer (QIB), such as a sovereign fund, mutual fund, or overseas portfolio investor, who invests the IPO being made available to the general public following SEBI criteria. The IPO portion to the public (QIB portion) is lowered to that degree since the anchor portion is a component of the public issue. These anchors, the first investors, give investors trust and enhance the appeal of the IPO process. Additionally, anchor investors play a significant role in the IPO's price discovery.

Anchor Allocation Investors in Interarch Building Products Limited IPO

On August 16, 2024, Interarch Building Products Limited completed the bidding for its anchor allocation, attracting a solid response from institutional investors. The anchor investors participated actively in the book-building process, demonstrating strong confidence in the company's potential. A total of 1,994,288 shares were allotted to various anchor investors. The allocation was made at the upper IPO price band of ₹900 per share, resulting in a total anchor allocation amounting to ₹179.49 crore. This robust response from anchor investors highlights the significant interest and confidence in Interarch Building Products Limited ahead of its IPO.

The anchor investors absorbed a substantial portion of the total issue size of ₹600.29 crore, marking a crucial step in the overall IPO process. The anchor allocation represents a key endorsement by institutional investors, which typically sets a positive tone for the retail and other investor segments.

The list of anchor investors and their respective allocations is typically released post-allocation, but the significance of this anchor investment is already clear. These anchor investors, who are major institutional players, often include mutual funds, foreign institutional investors (FIIs), and insurance companies. Their involvement usually indicates a positive outlook on the company's future prospects, which can influence the overall success of the IPO.
 

The above list includes the 20 anchor investors allotted shares of 3.90% or above each anchor portion ahead of the Interarch Building Products IPO. In total, there were 45 anchor investors, but only the 20 who received more than 3.90% of each anchor quota are mentioned in the list above. The detailed and comprehensive report on the anchor allocation, separated by the mutual fund portion, can be accessed on the BSE website.

Overall, the anchors absorbed 29.94% 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 remaining amount will be available for QIB allocation as part of the regular IPO. Typically, smaller issues find it challenging to attract FPIs, while more significant issues often do not appeal to mutual funds in anchor placements. However, Interarch Building Products attracted considerable interest from all categories of anchors, including FPIs, participatory notes routed through ODIs, domestic mutual funds, AIFs, and insurance companies.

The anchor response usually sets the tone for retail participation in the IPO, and in this instance, the anchor response has been particularly strong. Out of the 1,994,288 shares allocated to the anchors in the IPO, a significant portion was absorbed by domestic mutual funds registered with SEBI. This allocation was spread across various mutual fund schemes, demonstrating robust participation and confidence in the company's growth prospects.
 

Key dates for Interarch Building Products Limited IPO and How to Apply

The Interarch Building Products IPO is a book-built issue, aiming to raise ₹600.29 crores. This issue comprises a fresh issue of 0.22 crore shares, aggregating to ₹200.00 crores, and an offer for sale of 0.44 crore shares, aggregating to ₹400.29 crores.

The issue opens for subscription on 19th August 2024 and closes for subscription on 21st August 2024 (both days inclusive). The basis of allotment will be finalised on 22nd August 2024, and the refunds will be initiated on 23rd August 2024. Additionally, the demat credits are expected to be completed by 23rd August 2024, and the stock will be listed on 26th August 2024 on both the NSE and the BSE. The credits to the Demat account to the extent of shares allotted will happen by the close of 23rd August 2024.

The price band for the IPO is set between ₹850 to ₹900 per share. The minimum lot size for an application is 16 shares, making the minimum investment required by retail investors ₹14,400. For small NIIs, the minimum lot size investment is 14 lots (224 shares), amounting to ₹201,600, while for big NIIs, it is 70 lots (1,120 shares), amounting to ₹1,008,000.

Ambit Private Limited and Axis Capital Limited are the book-running lead managers for the Interarch Building Products IPO, while Link Intime India Private Ltd is the registrar for the issue.