Sanstar IPO: Anchor Allocation at 30%

About Sanstar IPO

The stock of Sanstar IPO has a face value of ₹2 per share and the price band for the book building IPO has been set in the range of ₹90 to ₹95 per share. The fresh issue portion of the IPO comprises the issue of 4,18,00,000 shares (418.00 lakh shares), which at the upper price band of ₹95 per share will translate into a fresh issue size of ₹397.10 crore. The offer for sale (OFS) portion of the IPO comprises the sale / offer of 1,19,00,000 shares (119.00 lakh shares), which at the upper price band of ₹95 per share will translate into an OFS size of ₹113.05 crore. The 119 lakh shares in the OFS is being entirely offered by the promoter shareholders and the promoter group shareholders. Therefore, the total IPO will comprise of a fresh issue and an OFS of 5,37,00,000 shares (537.00 lakh shares) which at the upper end of the price band of ₹95 per share aggregates to total issue size of ₹510.15 crore.

Read more about Sanstar IPO

The fresh funds will be used for capital expenditure for expanding its Dhule facility, repaying/prepaying some of its outstanding debts and partially for general corporate purposes. The promoters of the company are Gouthamchand Sohanlal Chowdhary, Sambhav Gautam Chowdhary, and Shreyans Gautam Chowdhary. The promoters currently hold 99.77% stake in the company, which will get diluted post the IPO to 70.37. The IPO will be lead managed by Pantomath Capital Advisors Private Ltd, while Link Intime India Private Ltd will be the IPO registrar. Sanstar IPO will be listed on the NSE and the BSE on the IPO mainboard.

A brief on the Anchor Allocation of Stanley Lifestyles IPO

The anchor issue of Sanstar IPO saw a relatively strong response on 18th July 2024 with 30.00% of the IPO size getting absorbed by the anchors. Out of 5,37,00,000 shares (537.00 lakh shares) on offer, the anchors picked up 1,61,10,000 shares (161.10 lakh shares) accounting for 30.00% of the total IPO size. The anchor placement reporting was made to the BSE late on Thursday, 18th July 2024; one working day ahead of the IPO opening on Friday, 19th July 2024. 

The entire anchor allocation was made at the upper end of the price band of ₹95 per share. This includes the face value of ₹2 per share plus a share premium of ₹93 per share, taking the anchor allocation price to ₹95 per share. Let us focus on the anchor allotment portion ahead of the Sanstar Ltd IPO, which saw the anchor bidding opening and also closing on 18th July 2024. Post the anchor allocation, here is how the overall allocation looked.

Data Source: Company RHP

Here it must be noted that the 1,61,10,000 shares allocated to the anchor investors on 18th July 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 50.00% before the anchor allocation to 20.00% 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 Stanley Lifestyles.

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 Sanstar IPO

On 18th July 2024, Sanstar 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 1,61,10,000 shares were allotted to a total of 13 anchor investors. The allocation was done at the upper IPO price band of ₹95 per share (including premium of ₹93 per share) which resulted in an overall anchor allocation of ₹153.05 crore. The anchors have already absorbed 30.00% of the total issue size of ₹510.15 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 Sanstar Ltd. The entire anchor allocation of ₹153.05 crore was spread across a total of 13 major anchor investors, with all the 13 anchor investors getting more than 2% each out of the anchor allocation quota. While there were 13 anchor investors in all, all 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, obviously, accounted for 100.00% of the total anchor allocation of  ₹153.05 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 includes the set of 13 anchor investors who got allotted shares of 2% or above each of the anchor portion done ahead of the Sanstar Ltd IPO. In fact, there were 13 anchor investor in all; with all 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=20240718-49&attachedId=bc5bfc8b-2ceb-4122-bd07-4b56a8412dd0

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 30.00% 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. Sanstar Ltd 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 Sanstar Ltd 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 1,61,10,000 shares allocated to the anchors in the IPO, a total of 36,84,450 shares were allocated to domestic mutual funds registered with SEBI. This allocation was spread across 3 mutual fund schemes belonging to 2 asset management company (AMCs) in India. The mutual fund allocation in the anchor portion amounted to 22.87% of the total anchor size.

Key dates for Sanstar IPO and How to Apply?

The issue opens for subscription on 19th July 2024 and closes for subscription on 23rd July 2024 (both days inclusive). The basis of allotment will be finalized on 24th July 2024 and the refunds will be initiated on 25th July 2024. In addition, the demat credits are expected to also happen on 25th July 2024 and the stock will list on 26th July 2024 on the NSE and the BSE. Sanstar Ltd will test the appetite for private sector new age specialty plant-based product stocks in India. The credits to the demat account to the extent of shares allotted will happen by the close of 25th July 2024 under ISIN (INE08NE01025).