Medi Assist Healthcare Services IPO Anchor Allocation at 30%

About the Medi Assist Healthcare Services Ltd IPO

The stock of Medi Assist Healthcare Services IPO has a face value of ₹5 per share and the price band for the book built IPO has been set in the range of ₹397 to ₹418 per share. Medi Assist Healthcare Services IPO will be entirely an offer for sale (OFS), with no fresh issue component in the issue. The offer for sale (OFS) portion of the IPO of Medi Assist Healthcare Services Ltd comprises the issue of 2,80,28,168 shares (280.28 lakh shares approximately), which at the upper price band of ₹418 per share translates into OFS issue size of ₹1,171.58 crore. Promoters hold 67.55% in the company. Out of the promoters, Dr Vikram Jit Singh Chhatwal will offer his entire 3.69% stake via OFS. The other promoter, Medimatter Health will reduce stake from 27.94% to 9.83%. The third promoter, Bessemer India Holdings will not participate. Promoter stake, post-issue stands reduced to 45.75%.

Since there is no fresh issue, the OFS portion will also double up as the overall issue size. Hence, the overall IPO of Medi Assist Healthcare Services Ltd will comprise of the issue of 2,80,28,168 shares (280.28 lakh shares approximately), which at the upper price band of ₹418 per share translates into total IPO size of ₹1,171.58 crore. The IPO of Medi Assist Healthcare Services Ltd will be listed on the NSE and the BSE on the IPO mainboard. The entire IPO is an offer for sale (OFS). That means there will be no fresh funds coming into the company due to the IPO. An offer for sale is just a transfer of ownership. The IPO will be lead managed by Axis Capital, IIFL Securities, Nuvama Wealth Management and SBI Capital Markets. Link Intime India Private Ltd will be the registrar to the issue.

A brief on the anchor allocation of Medi Assist Healthcare Services Ltd

The anchor issue of Medi Assist Healthcare Services Ltd saw a relatively strong response on 12th January 2024 with 30% of the IPO size getting absorbed by the anchors. Out of 2,80,28,168 shares (280.28 lakh shares approximately) on offer, the anchors picked up 84,08,449 shares (84.08 lakh shares approximately) accounting for 30% of the total IPO size. The anchor placement reporting was made to the BSE late on Friday, 12th January 2024; one working day ahead of the IPO opening on Monday, 15th January 2024.

The entire anchor allocation was made at the upper price band of ₹418 per share. This includes the face value of ₹5 per share plus a share premium of ₹413 per share, taking the anchor allocation price to ₹418 per share. Let us focus on the anchor allotment portion ahead of the Medi Assist Healthcare Services Ltd IPO, which saw the anchor bidding opening and also closing on 12th January 2024. Post the anchor allocation, here is how the overall allocation looked.

Here it must be noted that the 84,08,449 shares issued to the anchor investors on 12th January 2024, 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. Hence the public QIB quota stands reduced from 50% to 20%, due to 30% being taken away by anchor investors.

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 Medi Assist Healthcare Services IPO.

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 to investors in Medi Assist Healthcare Services Ltd

On 12th January 2024, Medi Assist Healthcare Services 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 84,08,449 shares were allotted to a total of 36 anchor investors. The allocation was done at the upper IPO price band of ₹418 per share (including premium of ₹413 per share) which resulted in an overall anchor allocation of ₹351.47 crore. The anchors have already absorbed 30% of the total issue size of ₹1,171.58 crore, which is indicative of fairly robust institutional demand.

Listed below are the 20 anchor investors who, have been allotted 2% or more of the anchor allocation done ahead of the IPO of Medi Assist Healthcare Services Ltd. The entire anchor allocation of ₹351.47 crore was spread across a total of 36 major anchor investors, with 20 anchor investors getting more than 2% each out of the anchor allocation quota. While there were 36 anchor investors in all, only the 20 anchor investors who got allocated 2% or more each of the anchor quota are listed in the table below. These 20 anchor investors accounted for 81.54% of the total anchor collection of ₹351.47 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 20 anchor investors who got allotted shares of 2% or above each of the anchor portion done ahead of the Medi Assist Healthcare Services Ltd IPO. However, there were 36 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=20240112-41&attachedId=1f8bb6e5-9f04-4de8-b1a6-bb9e59d3b099

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. Medi Assist Healthcare Services 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 Medi Assist Healthcare Services 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 84,08,449 shares allocated to the anchors in the IPO, a total of 40,70,768 shares were allocated to domestic mutual funds registered with SEBI. This allocation was spread across 18 mutual fund schemes belonging to 11 asset management companies (AMCs). The mutual fund allocation in the anchor portion amounted to 48.41% of the total anchor size.

Next Steps in the IPO process

With the anchor issue completed on 12th January 2024, the actual IPO will open on the next working day to subscribe to the retail portion, HNI / NII portion and the residual 20% of the QIB portion. The issue opens for subscription on 15th January 2024 and closes for subscription on 17th January 2024 (both days inclusive). The basis of allotment will be finalized on 18th January 2024 and the refunds will be initiated on 19th January 2024. In addition, the demat credits are also expected to happen on 19th January 2024 and the stock is scheduled to list on 22nd January 2024 on the NSE and the BSE. It is a mainboard issue so it will be traded in the regular EQ listing on the NSE. The shares will be credited to the demat account to the extent of shares allotted on 19th January 2024 bearing ISIN number (INE456Z01021).