Bikaji Foods International Ltd IPO gets 29.75% anchor allocated

The anchor issue of Bikaji Foods International Ltd saw a robust response on 02nd November 2022 with 29.75% of the IPO size getting absorbed by the anchors. Out of the 2,93,73,984 shares on offer, the anchors picked up 87,37,194 shares accounting for 29.75% of the total IPO size. The anchor placement reporting was made to the BSE late on Wednesday. Bikaji Foods International IPO opens on 03rd November 2022 in the price band of Rs.285 to Rs.300 and will close for subscription on 07th November 2022 (both days inclusive). The entire anchor allocation was made at the upper price band of Rs300. Let us focus on the anchor allotment portion ahead of the Bikaji Foods International 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. 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. The minimum anchor investment is Rs100 million or Rs10 core, below which bids cannot be put. 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 aid in the IPO price discovery.

Anchor placement story of Bikaji Foods International Ltd

On 02nd November 2022, Bikaji Foods International 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 87,37,194 shares were allotted to a total of 36 anchor investors. The allocation was done at the upper IPO price band of Rs.300 which resulted in an overall allocation of Rs.262.12 crore. The anchors have already absorbed 29.75% of the total issue size of Rs881.22 crore, which is indicative of the robust institutional demand. 

The entire anchor allocation of Rs.262.12 crore was spread across these 36 domestic and international anchor investors. Listed below are the 12 anchor investors out of the 36; who have got more than 3% allocation in the anchor placement. 

Data Source: BSE Filings

While the GMP has remained stable between Rs70 and Rs72, it shows an attractive premium of 24% on listing. This has led to strong anchor response with the anchors taking in 29.75% 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. Bikaji Foods International Ltd has been a mix, getting good response from FPIs and domestic mutual funds. In fact, Bikaji has got a positive response from an array of foreign institutional investors. With strong SIP flows, most of the equity funds are flush with cash at this point of time and that has helped the appetite for anchor allocation in this IPO of Bikaji Foods from domestic investors too.

Out of the total 87,37,194 shares allotted by way of anchor placement, Bikaji Foods International Ltd allotted a total of 36,83,565 shares to 17 domestic mutual fund schemes across 10 AMCs. The mutual fund allocation represents 42.16% of the overall anchor allocation of Bikaji done on 02nd November.