Inox Green Energy Services Ltd IPO gets 45% anchor allocated

The anchor issue of Inox Green Energy Services Ltd saw a robust response on 10th November 2022 with 45% of the IPO size getting absorbed by the anchors. Out of the 11,38,46,154 shares on offer, the anchors picked up 5,12,30,769 shares accounting for 45% of the total IPO size. The anchor placement reporting was made to the BSE late on Thursday. Inox Green Energy Services IPO opens on 11th November 2022 in the price band of Rs.61 to Rs.65 and will close for subscription on 15th November 2022 (both days inclusive). The entire anchor allocation was made at the upper price band of Rs65. Let us focus on the anchor allotment portion ahead of the Inox Green Energy Services Ltd IPO.

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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 Inox Green Energy Services Ltd

On 09th November 2022, Inox Green Energy Services 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 5,12,30,769 shares were allotted to a total of 27 anchor investors. The allocation was done at the upper IPO price band of Rs.65 which resulted in an overall allocation of Rs.658.04 crore. The anchors have already absorbed 45% of the total issue size of Rs333 crore, which is indicative of the robust institutional demand.

Listed below are the 10 anchor investors who got allotted at least 4% of the total anchor allocation individually. The entire anchor allocation of Rs.333 crore was spread across these 27 major anchor investors. These top 10 anchor investors listed below accounted for 60.82% of the total anchor allocation of Inox Green Energy Services Ltd.

Data Source: BSE Filings

While the GMP has picked steam to around Rs9, it shows an attractive but relatively subdued premium of 13-14% on listing. This has led to reasonable anchor response with the anchors taking in 45% 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, which is the general norm.

Read: Inox Green Energy Services IPO GMP

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. Inox Green Energy Services Ltd has been a mix, getting good response from FPIs but extremely strong response from the domestic mutual funds. The number and spread of the Foreign Portfolio Investors has been fairly healthy 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 Inox Green Energy Services Ltd.

Out of the total 5,12,30,769 shares allotted by way of anchor placement, Inox Green Energy Services Ltd allotted a total of 76,92,120 shares to 5 domestic mutual fund schemes across 3 AMCs. The mutual fund allocation represents 15.71% of the overall anchor allocation. Big FPI investors in the anchor portion included Citigroup, Morgan Stanley Asia, Nomura, Ampersand, Coeus Global, Cohesion MK, Volrado Ventures etc.