SRM Contractors IPO: Anchor Allocation at 30%

About the SRM Contractors IPO

SRM Contractors IPO is a book built issue of Rs 130.20 crores, comprising entirely of a fresh issue of 0.62 crore shares. SRM Contractors IPO opens for subscription on March 26, 2024, and closes on March 28, 2024. The allotment for the SRM Contractors IPO is expected to be finalized on Monday, April 1, 2024. SRM Contractors IPO will list on BSE and NSE, with a tentative listing date fixed as Wednesday, April 3, 2024.

SRM Contractors IPO price band is set at ₹200 to ₹210 per share. The minimum lot size for an application is 70 Shares. The minimum amount of investment required by retail investors is ₹14,700. For sNII, the minimum lot size investment is 14 lots (980 shares), amounting to ₹205,800, and for bNII, it is 69 lots (4,830 shares), amounting to ₹1,014,300.

Upcoming Ipo’s (SRM Contractors) book running lead manager is Interactive Financial Services Ltd IPO, while Bigshare Services Pvt Ltd is the registrar for the issue.

SRM Contractors IPO Objectives include utilizing the Net Proceeds from the Issue for various purposes:

1. SRM Contractors intends to fund capital expenditure requirements for the purchase of equipment/machinery.

2. SRM plans for full or partial repayment and/or prepayment of certain outstanding secured borrowings availed by them.

3.Allocating funds towards meeting the working capital requirements of SRM Contractors. Investing in Project Specific Joint Venture Projects is also part of the company's objective.

Additionally, SRM Contractors aims to utilize the proceeds for General Corporate Purpose.

A Brief on the Anchor Allocation of SRM Contractors Ltd

Data Source: BSE

SRM Contractors IPO presents 6.2 million equity shares, with distinct allotments for various investor categories. Anchor Investors secure a substantial 30%, followed by QIBs at 20%, NII at 15%, and Retail Investors at 35%. Additionally, there are specific allocations for bNII and sNII, amounting to 10% and 5% respectively. Overall, the IPO is valued at ₹ 130.20 crores.

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 SRM Contractors Ltd.

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 SRM Contractors Ltd

The Board of Director of the company at its meeting held on March 22, 2024, in consultation with the Book Running Lead Managers to the Issue, have finalized allocation of 18,59,900, to Anchor Investors at Anchor Investor offer price Rs.210 per share in the following manner:

Data Source: BSE Filings (Value Allocated in Crore)

SRM Contractors Ltd. allocated 18,59,900 shares to Anchor Investors at Rs. 210 per share. Neomile Growth Fund - Series I received 48.66% of the allocation, followed by SAINT CAPITAL FUND and ASTORNE CAPITAL VCC - ARVEN at 25.67% each. Overall, the total value allocated amounted to ₹75.36 crores.

https://www.bseindia.com/markets/MarketInfo/DispNewNoticesCirculars.aspx?page=20240322-25

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.