Le Travenues Technology (Ixigo) IPO: Anchor Allocation at 45%

About the Le Travenues Technology Ltd (Ixigo) IPO

The stock of Le Travenues Technology Ltd (Ixigo) has a face value of ₹1 per share and the price band for the book building IPO has been set in the range of ₹88 to ₹93 per share. The Le Travenues Technology Ltd (Ixigo) IPO will be a combination of a fresh issue of shares and offer for sale (OFS) component. The fresh issue brings in fresh funds into the company, but is also EPS and equity dilutive. On the other hand, OFS is just a transfer of ownership; and hence neither EPS nor equity dilutive. The fresh issue portion of the IPO of Le Travenues Technology Ltd (Ixigo) comprises the issue of 1,29,03,226 shares (129.03 lakh shares approximately), which at the upper price band of ₹93 per share will translate into a fresh issue size of ₹120.00 crore. The offer for sale (OFS) portion of the IPO of Le Travenues Technology Ltd (Ixigo) comprises the sale / offer of 6,66,77,674 shares (666.78 lakh shares approximately), which at the upper price band of ₹93 per share will translate into an OFS size of ₹620.10 crore.

Out of the OFS size of 666.78 lakh shares, 8 selling shareholders will offer the entire quantity in the OFS. The selling shareholders include SAIF Partners (194.37 lakh shares), Peak XV Partners (130.24 lakh shares), Aloke Bajpai (119.50 lakh shares), Rajnish Kumar (119.50 lakh shares), Micromax Informatics (54.87 lakh shares), Placid Holdings (30.48 lakh shares),  Catalyst Trusteeship (13.34 lakh shares), and Madison India Capital (4.47 lakh shares). All selling in OFS will be by investor shareholders, since the company is professionally managed and does not identify with a promoter group. Thus, the total IPO of Le Travenues Technology Ltd (Ixigo) will comprise of a fresh issue and an OFS of 7,95,80,900 shares (795.81 lakh shares approximately) which at the upper end of the price band of ₹93 per share aggregates to total issue size of ₹740.10 crore. The IPO of Le Travenues Technology Ltd (Ixigo) will be listed on the NSE and the BSE on the IPO mainboard.

The fresh funds will be used for funding working capital needs, investing in cloud infrastructure and technology, as well as to fund inorganic growth via M&A. The company, being a professionally managed company, does not have an identified promoter group. The IPO will be lead managed by Axis Capital, DAM Capital Advisors (formerly IDFC Securities), and JM Financial; while Link Intime India Private Ltd will be IPO registrar.

A brief on the anchor allocation of Le Travenues Technology Ltd (Ixigo)

The anchor issue of Le Travenues Technology Ltd (Ixigo) saw a relatively strong response on 07th June 2024 with 45.00% of the IPO size getting absorbed by the anchors. Out of 7,95,80,899 shares (795.81 lakh shares approximately) on offer, the anchors picked up 3,58,11,405 shares (358.11 lakh shares approximately) accounting for 45.00% of the total IPO size. The anchor placement reporting was made to the BSE late on Friday, 07th June 2024; one working day ahead of the IPO opening on Monday, 10th June 2024. 

The entire anchor allocation was made at the upper end of the price band of ₹93 per share. This includes the face value of ₹1 per share plus a share premium of ₹92 per share, taking the anchor allocation price to ₹93 per share. Let us focus on the anchor allotment portion ahead of the Le Travenues Technology Ltd (Ixigo) IPO, which saw the anchor bidding opening and also closing on 07th June 2024. Post the anchor allocation, here is how the overall allocation looked.

Data Source: Company RHP

Here it must be noted that the 3,58,11,405 shares allocated to the anchor investors on 07th June 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 75.00% before the anchor allocation to 30.00% 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 Le Travenues Technology Ltd (Ixigo).

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 Le Travenues Technology Ltd (Ixigo)

On 07th June 2024, Le Travenues Technology Ltd (Ixigo) 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 3,58,11,405 shares were allotted to a total of 23 anchor investors. The allocation was done at the upper IPO price band of ₹93 per share (including premium of ₹92 per share) which resulted in an overall anchor allocation of ₹333.05 crore. The anchors have already absorbed 45.00% of the total issue size of ₹740.10 crore, which is indicative of fairly robust institutional demand. 

Listed below are the 13 anchor investors who, have been allotted 2% or more of the anchor allocation done ahead of the IPO of Le Travenues Technology Ltd (Ixigo). The entire anchor allocation of ₹333.05 crore was spread across a total of 23 major anchor investors, with only 13 anchor investors getting more than 2% each out of the anchor allocation quota. While there were 23 anchor investors in all, only the 13 anchor investors who got allocated 2% or more each of the anchor quota are listed in the table below. These 13 anchor investors accounted for 87.99% of the total anchor collection of  ₹333.05 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 number of shares.

Data Source: BSE Filings (Value Allocated in ₹ in Crore)

The above list only includes the set of 13 anchor investors who got allotted shares of 2% or above each of the anchor portion done ahead of the Le Travenues Technology Ltd (Ixigo) IPO. In fact, there were 23 anchor investor in all; with only the anchor investors getting more than 2% 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 can be accessed by clicking on the link below.

https://www.bseindia.com/markets/MarketInfo/DownloadAttach.aspx?id=20240607-48&attachedId=ae831a3d-f32c-4218-9287-5923612ec575

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 45.00% 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. Le Travenues Technology Ltd (Ixigo) saw a good deal of buying interest from all category of anchors viz. FPIs, participatory notes routed through ODIs, domestic mutual funds, AIFs, and insurance companies. Let us finally look at the sub-category of mutual fund participation in the anchor allocation ahead of the Le Travenues Technology Ltd (Ixigo) IPO.

The anchor response normally sets the tone for the retail participation in the IPO and the anchor response has been fairly steady this time around. Out of the 3,58,11,405 shares allocated to the anchors in the IPO, a total of 1,20,87,583 shares were allocated to domestic mutual funds registered with SEBI. This allocation was spread across 7 mutual fund schemes belonging to 4 asset management company (AMCs). The mutual fund allocation in the anchor portion amounted to 33.75% of the total anchor size.

Next steps in the Le Travenues Technology Ltd (Ixigo) IPO

The issue opens for subscription on 10th June 2024 and closes for subscription on 12th June 2024 (both days inclusive). The basis of allotment will be finalized on 13th June 2024 and the refunds will be initiated on 14th June 2024. In addition, the demat credits are expected to also happen on 14th June 2024 and the stock will list on 18th June 2024 on the NSE and the BSE. The IPO of Le Travenues Technology Ltd (Ixigo) will test the appetite for private sector new age ecommerce stocks in India. The credits to the demat account to the extent of shares allotted will happen by the close of 14th June 2024 under ISIN (INE0HV901016).