Elin Electronics IPO gets 30% anchor allocated

Elin Electronics IPO anchor issue saw a robust response on 19th December 2022 with 30% of the IPO size getting absorbed by the anchors. Out of the 1,92,30,746 shares on offer, the anchors picked up 57,69,223 shares accounting for 30% of the total IPO size. The anchor placement reporting was made to the BSE late on Monday. Elin Electronics IPO opens on 20th December 2022 in the price band of Rs. 234 to Rs. 247 and will close for subscription on 22nd December 2022 (both days inclusive). The entire anchor allocation was made at the upper price band of Rs. 247. Let us focus on the anchor allotment portion ahead of the Elin Electronics 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. 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 Elin Electronics Ltd

On 19th December 2022, Elin Electronics 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 27,69,223 shares were allotted to a total of 15 anchor investors. The allocation was done at the upper IPO price band of Rs. 247 which resulted in an overall allocation of Rs. 142.50 crore. The anchors have already absorbed 30% of the total issue size of Rs. 475 crore, which is indicative of the robust institutional demand.

Listed below are the 15 anchor investors who got allotted the total anchor allocation ahead of the IPO of Elin Electronics Ltd. The entire anchor allocation of Rs. 142.50 crore was spread across 15 major anchor investors. Listed below is the complete list of anchor investors who got allotted the total anchor allocation of Elin Electronics Ltd.

Data Source: BSE Filings

While the GMP has remained robust at around Rs45, it can be classified as a fairly healthy premium of 18-19% on listing. However, we have seen very strong anchor response with the anchors taking in 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. Elin Electronics Ltd has been a mix, getting good response from FPIs, but it has also got extremely strong response from the domestic mutual funds and the domestic insurance companies, considering its product positioning in the Indian market. The number and spread of the Foreign Portfolio Investors have been fairly narrow in this case. With strong SIP flows, most equity funds are flush with cash at this point of time and that has helped the MF appetite for anchor allocation in this IPO of Elin Electronics Ltd. Some of the major mutual funds to participate in the anchor allotment of Elin Electronics Ltd included SBI MF, Kotak MF, Aditya Birla MF and PGIM MF.

Out of the total 57,69,223 shares allotted by way of anchor placement, Elin Electronics Ltd allotted a total of 40,48,560 shares to 11 domestic mutual fund schemes across 4 AMCs. The mutual fund allocation represents a dominant 70.18% of the overall anchor allocation.