Nexus Select Trust REIT IPO gets 45% anchor allocated

The anchor issue of Nexus Select Trust REIT saw a robust response on 08th May 2023 with 45% of the IPO size getting absorbed by the anchors. Out of the 32,00,00,000 shares on offer, the anchors picked up 14,39,99,850 shares accounting for 45% of the total IPO size. The anchor placement reporting was made to the BSE late on Monday. The IPO of Nexus Select Trust REIT opens on 09th May 2023 in the price band of Rs.95 to Rs.100 and will close for subscription on 11th May 2023 (both days inclusive). The entire anchor allocation was made at the upper price band of Rs100. Let us focus on the anchor allotment portion ahead of the Nexus Select Trust REIT 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 Nexus Select Trust REIT

On 08th May 2023, Nexus Select Trust REIT 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 14,39,99,850 shares were allotted to a total of 20 anchor investors. The allocation was done at the upper IPO price band of Rs.100 which resulted in an overall allocation of Rs.1,440 crore. The anchors have already absorbed 45% of the total issue size of Rs3,200 crore, which is indicative of the robust institutional demand.

In the Nexus Select Trust REIT IPO, the institutional reservation is 75% with the balance 25% reserved for the HNIs. 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.1,440 crore was spread across these 20 major anchor investors. These top 10 anchor investors listed below accounted for 86.65% of the total anchor allocation of Nexus Select Trust REIT.

Data Source: BSE Filings

While the GMP had remained stable at around Rs5 for the first few days, it has since fallen to Rs4. This indicates a premium of 4% to the anchor portion or a GMP of 4%. 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.

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. Nexus Select Trust REIT 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 and includes names like Prusik Asia Equity Fund, Ghisallo Master Fund, Segantii India Mauritius, and Morgan Stanley Asia Singapore. 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 Nexus Select Trust REIT. HDFC Mutual Fund and ICICI Prudential were among the major domestic funds to participate in the anchor portion while the insurance participants included SBI Life, HDFC Life, SBI General and Reliance General. In addition, the NPS Trust and the IIFL Opportunities Fund also invested in the anchor portion.

Out of the total 14,39,99,850 shares allotted by way of anchor placement, Nexus Select Trust REIT allotted a total of 4,79,99,700 shares to 6 domestic mutual fund schemes across 3 AMCs. The mutual fund allocation represents 33.33% of the overall anchor allocation.

Nexus Select Trust REIT is a SEBI registered Real Estate Investment Trust or REIT with 17 Grade-A Urban Consumption Centres or commercial facilities spread across 14 Indian cities. REITs hold portfolio of commercial property assets. The total leasable area is 9.8 million SFT, which includes hotel assets and office assets; apart from commercial store spaces. Its tenant mix comprises of apparel and accessories, hypermarket, entertainment, and food and beverages (F&B). Nexus is present in key metros like Delhi, Navi Mumbai, Bengaluru, Pune, Hyderabad, and Chennai.