Innova Captab IPO Anchor Allocation at 30%

About Innova Captab IPO

Innova Captab IPO will be open from December 21, 2023 to December 26, 2023. The book built IPO has been priced in the band of ₹426 to ₹448 per share. The IPO of Innova Captab Ltd will be a combination of a fresh issue and an offer for sale (OFS). The fresh issue portion comprises the issue of 71,42,857 shares (71.43 lakh shares approximately), which at the upper price band of ₹448 per share will translate into a fresh issue size of ₹320 crore. The offer for sale portion of the IPO of Innova Captab Ltd comprises the sale of 55,80,357 shares (55.80 lakh shares approximately), which at the upper price band of ₹448 per share will translate into a total OFS size of ₹250 crore. Thus, the overall issue will comprise the issue and sale of 1,27,23,214 shares (127.23 lakh shares approximately), at ₹448 per share worth ₹570 crore. Innova Captab IPO will be listed on the NSE and the BSE. The fresh funds will be used for repayment of loans and funding working capital gaps. The IPO of Innova Captab Ltd will be lead managed by ICICI Securities and JM Financial. KFIN Technologies Ltd will be the registrar to the issue.

A brief on the anchor allocation of Innova Captab Ltd

The anchor issue of Innova Captab Ltd saw a relatively strong response on 20th December 2023 with 30% of the IPO size getting absorbed by the anchors. Out of 1,27,23,214 shares (127.23 lakh shares approximately) on offer, the anchors picked up 38,16,963 shares (38.17 lakh shares approximately) accounting for 30% of the total IPO size. The anchor placement reporting was made to the BSE late on Wednesday, December 20th, 2023; one working day ahead of the IPO opening on Thursday, 21st December 2023.

The entire anchor allocation was made at the upper price band of ₹448 per share. This includes the face value of ₹10 per share plus a share premium of ₹438 per share, taking the anchor allocation price to ₹448 per share. Let us focus on the anchor allotment portion ahead of the Innova Captab Ltd IPO, which saw the anchor bidding opening and also closing on 20th December 2023. Post the anchor allocation, here is how the overall allocation looked.

Here it must be noted that the 38,16,963 shares issued to the anchor investors on 20th December 2023, were actually reduced from the original QIB quota; and only the residual amount 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. 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 Innova Captab 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 Innova Captab Ltd

On 20th December 2023, Innova Captab 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 38,16,963 shares were allotted to a total of 17 anchor investors. The allocation was done at the upper IPO price band of ₹448 per share (including premium of ₹438 per share) which resulted in an overall anchor allocation of ₹171.00 crore. The anchors have already absorbed 30% of the total issue size of ₹570 crore, which is indicative of fairly robust institutional demand.

Listed below are the 16 anchor investors who, have been allotted 3% or more of the anchor allocation done ahead of the IPO of Innova Captab Ltd. The entire anchor allocation of ₹171 crore was spread across a total of 17 major anchor investors, with 16 anchor investors getting more than 3% each out of the anchor allocation quota. While there were 17 anchor investors in all, only 16 anchor investors who got allocated 3% or more each of the anchor quota are listed in the table below. These 16 anchor investors accounted for 98.12% of the total anchor collection of  ₹171 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 only includes the set of 16 anchor investors who got allotted shares of 3% or above each of the anchor portion done ahead of the Innova Captab Ltd IPO. However, there were 17 anchor investor in all. 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=20231220-48&attachedId=59951835-89c3-47c5-b298-683ed0c7dc93

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 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. Innova Captab 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 Innova Captab 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 38,16,963 shares allocated to the anchors in the IPO, a total of 17,13,030 shares were allocated to domestic mutual funds registered with SEBI. This allocation was spread across 8 mutual fund schemes belonging to 6 asset management companies (AMCs). The mutual fund allocation in the anchor portion amounted to 44.88% of the total anchor size.