Firstcry IPO Anchor Allocation Hits 44.96%

About Firstcry IPO (Brainbees Solutions)

The anchor allocation was made at the upper end of the price band of ₹465 per share. This includes the face value of ₹2 per share plus a share premium of ₹463 per share, taking the anchor allocation price to ₹465 per share. Let us focus on the anchor allotment portion ahead of the Brainbees Solutions (Firstcry) IPO, which saw the anchor bidding opening and closing on 5th August 2024.

Read more about Firstcry IPO

A brief on the Anchor Allocation of Brainbees Solutions (Firstcry) IPO

The anchor issue of (Brainbees Solutions) Firstcry IPO saw a strong response on 5th August 2024, with 44.96% of the IPO size getting absorbed by the anchors. Out of 90,194,432 shares on offer, the anchors picked up 40,555,428 shares, accounting for 44.96% of the total IPO size. The anchor placement reporting was made to the BSE late on Monday, 5th August 2024, one working day ahead of the IPO opening on Tuesday, 6th August 2024.

The entire anchor allocation was made at the upper end of the price band of ₹465 per share. This includes the face value of ₹2 per share plus a share premium of ₹463 per share, taking the anchor allocation price to ₹465 per share. Let us focus on the anchor allotment portion ahead of the Brainbees Solutions (Firstcry) IPO, which saw the anchor bidding open and close on 5th August 2024. After the anchor allocation, here is how the overall allocation looked.
 

Here, it must be noted that the 40,555,428 shares allocated to the anchor investors on 5th August 2024, were 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 74.94% before the anchor allocation to 29.98% after the anchor allocation. The overall allocation to QIBs includes the anchor portion, so the allotted anchor shares has been deducted from the QIB quota for 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 differs 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 just gives investors confidence that large, established institutions back the issue. The presence of institutional investors like mutual funds and foreign portfolio investors (FPIs) gives confidence to retail investors. Here are details of the anchor lock-in for the Brainbees Solutions (Firstcry) issue.

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 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 the 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 mutual fund, insurance company, or sovereign fund, which invests before the IPO is made available to the public as per SEBI regulations. The 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 the price discovery of the IPO.

Anchor Allocation Investors in Firstcry IPO

On 5th August 2024, Brainbees Solutions (Firstcry) completed the bidding for its anchor allocation. There was a robust response as the anchor investors participated in the book-building process. A total of 40,555,428 shares were allotted to 71 anchor investors. The allocation was done at the upper IPO price band of ₹465 per share (including premium of ₹463 per share), resulting in an overall anchor allocation of ₹1,885.83 crore. The anchors have already absorbed 44.96% of the total issue size of ₹4,193.73 crore, indicating strong institutional demand.

Listed below are the 25 anchor investors who have been allotted 2% or more of the anchor allocation before Brainbees Solutions IPO (Firstcry). The entire anchor allocation of ₹1,885.83 crore was spread across 71 major anchor investors, with 25 anchor investors getting more than 2% each out of the anchor allocation quota. While there were 71 anchor investors, only 25 were allocated 2% or more of each anchor quota, as listed in the table below. These 25 anchor investors accounted for 80.84% of the total anchor allocation of ₹1,885.83 crore. The detailed allocation is captured in the table below. The table below is indexed descending on the size of anchor allocation in terms of the number of shares.
 

The above list includes the 25 anchor investors who were allotted shares of 2% or above each of the anchor portions ahead of the Brainbees Solutions (Firstcry) IPO. In fact, there were 71 anchor investors in all, but only the 25 anchor investors who received more than 2% each of the anchor quota are mentioned in the list above. The detailed and comprehensive report on the anchor allocation with the mutual fund portion separated can be accessed on the BSE website.

Overall, the anchors absorbed 44.96% 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. Brainbees Solutions (Firstcry) saw a lot of buying interest from all categories of anchors, viz. FPIs, participatory notes routed through ODIs, domestic mutual funds, AIFs, and insurance companies. Finally, look at the sub-category of mutual fund participation in the anchor allocation ahead of the Brainbees Solutions (Firstcry) IPO.

The anchor response normally sets the tone for retail participation in the IPO, and the anchor response has been very strong this time around. Out of the 40,555,428 shares allocated to the anchors in the IPO, 15,160,928 shares were allocated to domestic mutual funds registered with SEBI. This allocation was spread across 23 mutual fund schemes belonging to 8 asset management companies (AMCs) in India. The mutual fund allocation in the anchor portion amounted to 37.38% of the total anchor size.

Key dates for Brainbees Solutions and How to Apply?

The issue opens for subscription on 6th August 2024 and closes for subscription on 8th August  2024 (both days inclusive). The basis of allotment will be finalized on 9th August 2024 and the refunds will be initiated on 12th August 2024. In addition, the demat credits are expected to happen on 12th August 2024, and the stock will be listed on 13th August 2024 on the NSE and the BSE. Brainbees Solutions (Firstcry) will test the appetite for new-age e-commerce and omnichannel retail stocks in India. The credits to the Demat account to the extent of shares allotted will happen by the close of 12th August 2024.

The issue is a fresh issue of 35,827,957 shares aggregating to ₹1,666.00 crore and an offer for sale of 54,359,733 shares aggregating to ₹2,527.73 crore. The price band is set at ₹440 to ₹465 per share. The minimum lot size for an application is 32 Shares. The minimum amount of investment required by retail investors is ₹14,880. The minimum lot size investment for small NIIs is 14 lots (448 shares), amounting to ₹208,320, and for big NIIs, it is 68 lots (2,176 shares), amounting to ₹1,011,840.

Kotak Mahindra Capital Company Limited, Morgan Stanley India Company Pvt Ltd, BofA Securities India Limited, JM Financial Limited, and Avendus Capital Pvt Ltd are the book-running lead managers of the Brainbees Solutions (Firstcry) IPO, while Link Intime India Private Ltd is the registrar for the issue.