Mankind Pharma IPO gets 30% anchor allocated

The anchor issue of Mankind Pharma IPO saw a robust response on 24th April 2023 with 30% of the IPO size getting absorbed by the anchors. Out of the 4,00,58,844 shares on offer, the anchors picked up 1,20,17,652 shares accounting for 30% of the total IPO size. The anchor placement reporting was made to the BSE late on Monday. The IPO of Mankind Pharma Ltd opens on 25th April 2023 in the price band of Rs.1,026 to Rs.1,080 and will close for subscription on 27th April 2023 (both days inclusive). The entire anchor allocation was made at the upper price band of Rs1,080. Let us focus on the anchor allotment portion ahead of the Mankind Pharma 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 Mankind Pharma Ltd

On 24th April 2023, Mankind Pharma 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 1,20,17,652 shares were allotted to a total of 77 anchor investors. The allocation was done at the upper IPO price band of Rs.1,080 which resulted in an overall allocation of Rs.1,297.91 crore. The anchors have already absorbed 30% of the total issue size of Rs4,326.36 crore, which is indicative of the robust institutional demand.

Listed below are the 19 anchor investors who got allotted at least 2% of the total anchor allocation individually. The entire anchor allocation of Rs.1,297.91 crore was spread across these 77 major anchor investors. These top 19 anchor investors listed below accounted for 54.72% of the total anchor allocation of Mankind Pharma Ltd.

Data Source: BSE Filings

The grey market price for the Mankind Pharma IPO has remained in the range of Rs80 to Rs90 and the strong anchor response is likely to boost the GMP further. At the GMP of Rs90, it represents a subdued premium of 8.33% on listing. This has led to reasonable 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. Mankind Pharma 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 healthy in this case.

Let us first look at a cross section of FPIs who participated in the anchor portion. This includes big names like Canada Pensions, Government of Singapore, Monetary Authority of Singapore, Goldman Sachs, Fidelity, Blackrock, Norwegian Pensions, ADIA, Nomura Advisory, Morgan Stanley, Wellington Fund, Neuberger Berman, and Amundi Funds. 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 Mankind Pharma Ltd. Aditya Birla AMC, HDFC MF, Kotak Mutual Fund, ICICI Prudential Mutual Fund, Invesco Mutual Fund, Canara Robeco MF and SBI MF were the AMCs to participate in the anchor allotment of Mankind Pharma Ltd. The anchor allocation also saw active participation from insurance companies like ICICI Prudential Life, HDFC Life, SBI Life, Bajaj Allianz Life, Tata AIA Life Insurance, Max Life Insurance etc.

Out of the total 1,20,17,652 shares allotted by way of anchor placement, Mankind Pharma Ltd allotted a total of 47,25,406 shares to 41 domestic mutual fund schemes across 16 AMCs. The mutual fund allocation represents 39.32% of the overall anchor allocation. In short, there has been robust participation from the FPIs, domestic mutual funds and insurance companies and that bodes well for the issue.