GPT Healthcare IPO: Anchor Allocation at 30%

About the GPT Healthcare IPO

GPT Healthcare IPO has a face value of ₹10 per share and the price band for the book building IPO has been set in the range of ₹177 to ₹186 per share. The IPO of GPT Healthcare Ltd is a combination of a fresh issue of shares and offer for sale (OFS) component. The fresh issue tends to bring fresh funds into the company, but is also EPS and equity dilutive. On the other hand, OFS is just a transfer of ownership. The fresh issue portion of the GPT Healthcare IPO comprises the issue of 21,50,537 shares (21.51 lakh shares approximately), which at the upper price band of ₹186 per share will translate into a fresh issue size of ₹40 crore. The offer for sale (OFS) portion of the IPO of GPT Healthcare Ltd comprises the sale of 2,60,82,786 shares (260.83 lakh shares approximately), which at the upper price band of ₹186 per share will translate into an OFS size of ₹485.14 crore.

Out of the OFS size of 2,60,82,786 shares, the investor shareholder(Banyan Tree Growth Capital LLC) will offer the entire lot of shares worth Rs485.14. Promoter shareholders will not be offering any shares in the offer for sale (OFS). Therefore, the total IPO of GPT Healthcare Ltd will comprise of a fresh issue and an OFS of 2,82,33,323 shares (282.33 lakh shares approximately) which at the upper end of the price band of ₹186 per share aggregates to total issue size of ₹525.14 crore. The IPO of GPT Healthcare Ltd will be listed on the NSE and the BSE on the IPO mainboard. The fresh funds will be used to repay / prepay some of the high-cost borrowings of the business. Promoters currently hold 67.34% in the company, which will get diluted post the IPO to 65.58%. The IPO will be lead managed by JM Financial, while Link Intime India Private Ltd will be the registrar to the IPO.

A brief on the anchor allocation of GPT Healthcare IPO

The anchor issue of GPT Healthcare IPO saw a relatively strong response on 21st February 2024 with 30% of the IPO size getting absorbed by the anchors. Out of 2,82,33,323 shares (282.33 lakh shares approximately) on offer, the anchors picked up 84,69,996 shares (84.70 lakh shares approximately) accounting for 30% of the total IPO size. The anchor placement reporting was made to the BSE late on Wednesday, 21st February 2024; one working day ahead of the IPO opening on Thursday, 22nd February 2024.

The entire anchor allocation was made at the upper price band of ₹186 per share. This includes the face value of ₹10 per share plus a share premium of ₹176 per share, taking the anchor allocation price to ₹186 per share. Let us focus on the anchor allotment portion ahead of the GPT Healthcare Ltd IPO, which saw the anchor bidding opening and also closing on 21st February 2024. Post the anchor allocation, here is how the overall allocation looked.

Here it must be noted that the 84,69,996 shares issued to the anchor investors on 21st February 2024, were actually reduced from the original QIB quota; and only the residual number of shares would be available to QIBs in the IPO. That change has been reflected in the table above, with the QIB IPO portion reduced to the extent of the anchor allocation. As a result, the QIB quota has reduced from 50% before the anchor allocation to 20% after the anchor allocation. The overall allocation to QIBs includes the anchor portion, so the anchor shares allotted has been deducted from the QIB quota for the purpose of the public issue.

Finer points of anchor allocation process

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. It is the presence of institutional investors like mutual funds and foreign portfolio investors (FPIs) that gives confidence to the retail investors. Here are details of the anchor lock-in for the issue of GPT Healthcare Ltd.

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 allocation investors in GPT Healthcare Ltd

On 21st February 2024, GPT Healthcare Ltd completed the bidding for its anchor allocation. There was a strong and robust response as the anchor investors participated through the process of book building. A total of 84,69,996 shares were allotted to a total of 15 anchor investors. The allocation was done at the upper IPO price band of ₹186 per share (including premium of ₹176 per share) which resulted in an overall anchor allocation of ₹157.54 crore. The anchors have already absorbed 30% of the total issue size of ₹525.14 crore, which is indicative of fairly robust institutional demand.

Listed below are the 15 anchor investors who, have been allotted 2% or more of the anchor allocation done ahead of the IPO of GPT Healthcare Ltd. The entire anchor allocation of ₹157.54 crore was spread across a total of 15 major anchor investors, with all the 15 anchor investors getting more than 2% each out of the anchor allocation quota. While there were 15 anchor investors in total, all the 15 anchor investors were allocated 2% or more each of the anchor quota and are therefore listed in the table below. These 15 anchor investors accounted for 100% of the total anchor collection of  ₹157.54 crore. The detailed allocation is captured in the table below, indexed descending on size of anchor allocation.

Data Source: BSE Filings (Value Allocated in ₹ in Crore)

The above list includes the set of 15 anchor investors who got allotted shares of 2% and above each of the anchor portion done ahead of the GPT Healthcare Ltd IPO. Since all the 15 anchor investors got allocated more than 2% each of the anchor allocation; all the names of anchors have been included in the anchor list above. The detailed and comprehensive report on the anchor allocation with the mutual fund portion separated can be accessed by clicking on the link below.

https://www.bseindia.com/markets/MarketInfo/DownloadAttach.aspx?id=20240221-40&attachedId=0d992317-87a5-4978-b4fc-90e46cf200ae

The detailed report is available in PDF format and can be downloaded by clicking on the link above. Alternatively, readers can also opt to cut this link and paste in their browser, in case the link is not directly clickable. The details of the anchor allocation can also be accessed in the Notices section of the BSE on its website www.bseindia.com.

Overall, the anchors absorbed 30% 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 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. GPT Healthcare Ltd saw a good deal of buying interest from all category of anchors viz. FPIs, participatory notes routed through ODIs, domestic mutual funds, AIFs, and insurance companies. Let us finally look at the sub-category of mutual fund participation in the anchor allocation ahead of the GPT Healthcare Ltd IPO.

The anchor response normally sets the tone for the retail participation in the IPO and the anchor response has been fairly steady this time around. Out of the 84,69,996 shares allocated to the anchors in the IPO, a total of 38,09,760 shares were allocated to domestic mutual funds registered with SEBI. This allocation was spread across 7 mutual fund schemes belonging to 3 asset management company (AMCs). The mutual fund allocation in the anchor portion amounted to 44.98% of the total anchor size.

Key dates for GPT Healthcare Ltd IPO and how to apply?

The issue opens for subscription on 22nd February 2024 and closes for subscription on 26th February 2024 (both days inclusive). The basis of allotment will be finalized on 27th February 2024 and the refunds will be initiated on 28th February 2024. In addition, the demat credits are expected to also happen on 28th February 2024 and the stock will list on 29th February 2024 on the NSE and the BSE. GPT Healthcare Ltd will test the appetite for such healthcare stocks in India. The credits to the demat account to the extent of shares allotted will happen by the close of 28th February 2024 under ISIN (INE486R01017).