Senco Gold IPO gets 30% Anchor Allocated

The anchor issue of Senco Gold IPO saw a robust response on 03rd July 2023 with 30% of the IPO size getting absorbed by the anchors. Out of the 1,27,76,025 shares on offer, the anchors picked up 38,32,807 shares accounting for 30% of the total IPO size. The anchor placement reporting was made to the BSE late on Monday. The IPO of Senco Gold Ltd opens on 04th July 2023 in the price band of ₹301 to ₹317 and will close for subscription on 06th July 2023 (both days inclusive). The entire anchor allocation was made at the upper price band of ₹317. Let us focus on the anchor allotment portion ahead of the Senco Gold 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 Senco Gold Ltd

On 03rd July 2023, Senco Gold IPO 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 38,32,807 shares were allotted to a total of 21 anchor investors. The allocation was done at the upper IPO price band of ₹317 which resulted in an overall allocation of ₹121.50 crore. The anchors have already absorbed 30% of the total issue size of ₹405 crore, which is indicative of the robust institutional demand.

Listed below are the 14 anchor investors who got allotted at least 4% of the total anchor allocation individually. The entire anchor allocation of ₹121.50 crore was spread across these 21 major anchor investors. These top 14 anchor investors listed below accounted for 90.14% of the total anchor allocation of Senco Gold Ltd.

Data Source: BSE Filings

The GMP has remained robust at the level of ₹120, and at the upper end of the price band of ₹317, it translates into an attractive premium of 37-38% 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. Senco Gold Ltd has been a mix, getting good response from FPIs; apart 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 include BNP Paribas, Societe General, Jupiter Fund, Ashoka Fund etc. 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 Senco Gold Ltd. Nippon India AMC, Whiteoak AMC, Bandhan Mutual Fund, Templeton MF and Sundaram MF were among the AMCs to participate in the anchor allotment of Senco Gold Ltd.

Out of the total 38,32,807 shares allotted by way of anchor placement, Senco Gold Ltd allotted a total of 15,91,444 shares to 11 domestic mutual fund schemes across 5 AMCs. The mutual fund allocation represents 41.52% of the overall anchor allocation.