Anchor Placement details of Syrma SGS Technology Ltd

The anchor issue of Syrma SGS Technology Ltd saw a robust response on 11th August 2022 and the announcement was made late on Thursday. The IPO opens on 12th August 2022 in the price band of Rs.209 to Rs.220 and shall close for subscription on 18th August 2022 due to a slew of holidays in between. Let us focus on the anchor allotment portion ahead of the Syrma SGS Technology Ltd IPO.

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. However, the anchor investors cannot be allotted shares at a discount to the IPO price.

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 placement story of Syrma SGS Technology Ltd

On 11th August 2022, Syrma SGS Technology 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 1,14,56,261 shares were allotted to a total of 18 anchor investors. The allocation was done at the upper IPO price band of Rs.220 which resulted in an overall allocation of Rs.252.04 crore.

Listed below are the 12 anchor investors based on the percentage of anchor allocation each in the IPO. Out of the total anchor allocation of Rs.252.04 crore, these 12 major anchor investors accounted for 85.74% of the overall anchor allocation.

Data Source: BSE Filings

With stable signals coming from the GMP with premiums of about 8-9%, the anchor response has been 30% of the total issue size. The QIB portion in the IPO 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 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. Syrma SGS Technology Ltd has been a mix, getting good response from FPIs and domestic mutual funds. Apart from the above list, there were another 6 funds which also invested in the anchor portion of the Syrma SGS Technology IPO. This is likely to be positive for the actual IPO response when the issue opens on Friday, the 12th of August.

Out of the total 114.56 lakh shares allotted by way of anchor placement, Syrma SGS Technology Ltd allotted a total of 38.19 lakh shares to 7 domestic mutual fund schemes across 5 AMCs. The mutual fund allocation represents 33.33% of the overall anchor allocation.