Platinum Industries IPO Anchor Allocation at 30%

About the Platinum Industries IPO

The stock of Platinum Industries Ltd has a face value of ₹10 per share and the price band for the book building IPO has been set in the range of ₹162 to ₹171 per share. Platinum Industries IPO will be entirely a fresh issue of shares and no offer for sale (OFS) component in the IPO. The fresh issue tends to bring in fresh funds into the company, but is also EPS and equity dilutive. On the other hand, OFS is just a transfer of ownership. The fresh issue portion of the IPO of Platinum Industries Ltd comprises the issue of 1,37,61,225 shares (137.61 lakh shares approximately), which at the upper price band of ₹171 per share will translate into a fresh issue size of ₹235.32 crore. Since there is no offer for sale (OFS) portion, the fresh issue size will double up as the overall issue size too.

Thus, overall IPO of Platinum Industries Ltd will comprise of the issue of 1,37,61,225 shares (137.61 lakh shares approximately) which at the upper end of the price band of ₹171 per share aggregates to total issue size of ₹235.32 crore. The IPO of Platinum Industries Ltd will be listed on the NSE and the BSE on the IPO mainboard. The fresh funds will be used to invest in the subsidiary, Platinum Stabilizers Egypt LLC for capex needs, capex for current Palghar unit, and for funding working capital needs. Promoters currently hold 94.74% in the company, which will get diluted post the IPO to 71.00%. The IPO will be lead managed by Unistone Capital Private Ltd, while Bigshare Services Private Ltd will be the IPO registrar.

A brief on the anchor allocation of Platinum Industries IPO

The anchor issue of Platinum Industries Ltd saw a relatively strong response on 26th February 2024 with 30% of the IPO size getting absorbed by the anchors. Out of 1,37,61,225 shares (137.61 lakh shares approximately) on offer, the anchors picked up 41,28,237 shares (41.28 lakh shares approximately) accounting for 30% of the total IPO size. The anchor placement reporting was made to the BSE late on Monday, 26th February 2024; one working day ahead of the IPO opening on Tuesday, 27th February 2024.

The entire anchor allocation was made at the upper price band of ₹171 per share. This includes the face value of ₹10 per share plus a share premium of ₹161 per share, taking the anchor allocation price to ₹171 per share. Let us focus on the anchor allotment portion ahead of the Platinum Industries Ltd IPO, which saw the anchor bidding opening and also closing on 26th February 2024. Post the anchor allocation, here is how the overall allocation  of shares in the IPO of Platinum Industries looked like.

Here it must be noted that the 41,28,237 shares issued to the anchor investors on 26th February 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. As a result, the QIB quota has reduced from 50% before the anchor allocation to 20% after 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 Platinum Industries 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 Platinum Industries IPO

On 26th February 2024, Platinum Industries 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 41,28,237 shares were allotted to a total of 7 anchor investors. The allocation was done at the upper IPO price band of ₹171 per share (including premium of ₹161 per share) which resulted in an overall anchor allocation of ₹70.59 crore. The anchors have already absorbed 30% of the total issue size of ₹235.32 crore, which is indicative of fairly robust institutional demand.

Listed below are the 7 anchor investors who, have been allotted 5% or more of the anchor allocation done ahead of the IPO of Platinum Industries Ltd. The entire anchor allocation of ₹70.59 crore was spread across a total of 7 major anchor investors, with all the 7 anchor investors getting more than 5% each out of the anchor allocation quota. Since all the 7 anchor investors were allocated more than 5% of the total anchor portion, all these seven investors have been listed in the table below. These 7 anchor investors listed in the table below accounted for 100% of the total anchor collection of  ₹70.59 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 includes the entire set of 7 anchor investors who got allotted shares of 5% or above each of the anchor portion done ahead of the Platinum Industries Ltd IPO. In fact, there were 7 anchor investor in all; with only the anchor investors getting more than 5% each of the anchor quota being mentioned in the list above. The detailed and comprehensive report on the anchor allocation with the mutual fund portion separated, if any, can be accessed by clicking on the link below.

https://www.bseindia.com/markets/MarketInfo/DownloadAttach.aspx?id=20240226-56&attachedId=3b00881a-4825-464d-abe5-ea4c2f7add96

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. Platinum Industries Ltd saw a good deal of buying interest from the alternate investment funds (AIFs), even as the other category of anchor investors like domestic mutual funds, FPIs and insurance companies were largely absent due to the relatively small size of the IPO.

Let us finally look at the sub-category of mutual fund participation in the anchor allocation ahead of the Platinum Industries Ltd IPO. There has been allocation done to any of the mutual fund schemes of asset management companies (AMCs) registered with SEBI.

Key dates for Platinum Industries IPO and how to apply?

The issue opens for subscription on 27th February 2024 and closes for subscription on 29th February 2024 (both days inclusive). The basis of allotment will be finalized on 01st March 2024 and the refunds will be initiated on 04th March 2024. In addition, the demat credits are expected to also happen on 04th March 2024 and the stock will list on 05th March 2024 on the NSE and the BSE. Platinum Industries Ltd will test the appetite for such industrial support stocks in India. The credits to the demat account to the extent of shares allotted will happen by the close of 04th March 2024 under ISIN (INE0PT501018).