Zaggle Prepaid Ocean Services IPO gets 45% Anchor Allocated

About the Zaggle Prepaid Ocean Services IPO

The anchor issue of Zaggle Prepaid Ocean Services IPO saw a relatively strong response on 13th September 2023 with 45% of the IPO size getting absorbed by the anchors. Out of the 3,43,52,255 shares (343.52 lakh shares approximately) on offer, the anchors picked up 1,54,58,515 shares (154.59 lakh shares approximately) accounting for 45% of the total IPO size. The anchor placement reporting was made to the BSE late on Wednesday, September 13th, 2023; a day ahead of the IPO opening. The IPO of Zaggle Prepaid Ocean Services Ltd opens on 14th September 2023 in the price band of ₹156 to ₹164 and will close for subscription on 18th September 2023 (both days inclusive).

The entire anchor allocation was made at the upper price band of ₹164. This includes the face value of ₹1 per share plus a premium of ₹163 per share, taking the anchor allocation price to ₹164 per share. Let us focus on the anchor allotment portion ahead of the Zaggle Prepaid Ocean Services IPO, which saw the anchor bidding opening and also closing on 13th September 2023. Before that, here is how the overall allocation will look.

The overall allocation to QIBs includes the anchor portion, so the anchor shares allotted will be 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.

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 Zaggle Prepaid Ocean Services IPO

On 13-Sep-2023, Zaggle Prepaid Ocean Services IPO 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 1,54,58,515 shares were allotted to a total of 23 anchor investors. The allocation was done at the upper IPO price band of ₹164 (including premium of ₹163 per share) which resulted in an overall allocation of ₹253.52 crore. The anchors have already absorbed 45% of the total issue size of ₹563.38 crore, which is indicative of fairly robust institutional demand.

Listed below are the 10 anchor investors who got allotted shares as part of the overall anchor allocation quota for the IPO of Zaggle Prepaid Ocean Services Ltd to the extent of more than 4% of the overall anchor allocation. The entire anchor allocation of ₹253.52 crore was spread across a total of 23 major anchor investors, of which the list below only covers 10 anchor investors with more than 4% of anchor quota allocated to them. These 10 anchor investors listed below accounted for 63.32% of the total anchor allocation of Zaggle Prepaid Ocean Services IPO and their participation will set the tone for retail participation in the IPO.

Data Source: BSE Filings

While the GMP has surged to a robust level of ₹36, it shows an attractive premium of 21.95% on listing. This has led to very strong 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. Zaggle Prepaid Ocean Services Ltd has witnessed anchor interest from domestic mutual funds, foreign portfolio investors, and even insurance companies.

Zaggle Prepaid Ocean Services Ltd, in consultation with the book running lead managers (BRLMs) have allocated a total of 37,80,630 shares to domestic mutual funds, spread across 4 mutual fund schemes of 3 mutual fund AMCs. The mutual fund allocation alone is 24.46% of the total anchor book of Zaggle Prepaid Ocean Services Ltd with an investment value of ₹62 crore.

Brief on the Zaggle Prepaid Ocean Services Ltd business model

Zaggle Prepaid Ocean Services Ltd, was incorporated in the year 2011 to provide fintech products and services to manage corporate business expenses. These were being managed through automated and innovative workflows designed for such specific needs. Zaggle Prepaid Ocean Services Ltd offers fintech and SAAS (software as a service) products to corporates in the field of banking, fintech, healthcare, FMCG, automobiles, infrastructure, industrial manufacturing etc. the SAAS platform of Zaggle Prepaid Ocean Services Ltd is designed with 3 broad purposes in mind. It helps in business spend management; and this includes managing of expenses and of vendors. Secondly, the platform also manages a very efficient and effective rewards and incentives program meant for employees and channel partners based on performance. Lastly, the SAAS platform also handles gift card management for merchants, which broadly falls under customer engagement management. The company has an impressive roster of clients which, inter alia, includes Tata Steel, Persistent Systems, Inox, Pitney Bowes, Wockhardt, Mazda, Philips Carbon Black (PCBL), Hiranandani Group, Greenply Industries and Cotiviti.

The product portfolio of Zaggle Prepaid Ocean Services Ltd comprises of various focused solutions for corporates. The Propel Platform is a SAAS platform for channel rewards and incentives management as well as for employee recognition. The SAVE SAAS based platform also offers a mobile application for digitized expense management, digitized authentication, and employee reimbursements. The Customer Engagement Management Services (CEMS) system enables merchants to manage their entire gamut of customer experience under a single umbrella platform. Zaggle Prepaid Ocean Services Ltd also offers the Zaggle payroll card which is a pre-paid card that allows customers to pay contractors, temporary employees, and contract workers as an alternative to cash or bank payments. Lastly, the Zoyer is an integrated data driven SAAS platform that offers spend management with automated finance capabilities.

The IPO will be lead managed by ICICI Securities, Equirus Capital, IIFL Securities and JM Financial. KFIN Technologies will be the registrar to the IPO.