Tracxn Technologies Ltd IPO gets 45% anchor allocated

The anchor issue of Tracxn Technologies Ltd saw a robust response on 07th October 2022 with 45% of the IPO size getting absorbed by the anchors. The announcement was made late on Friday. Tracxn Technologies IPO opens on 10th October 2022 in the price band of Rs.75 to Rs.80 and will close for subscription on 12th October 2022, both dates inclusive. Let us focus on the anchor allotment portion ahead of the opening of the Tracxn Technologies Ltd IPO.

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 Tracxn Technologies Ltd

On 07th October 2022, Tracxn Technologies Ltd completed the bidding for its anchor allocation. There was an enthusiastic response as the anchor investors participated through the process of book building. A total of 1,74,02,494 shares out of the total equity issue size of 3,86,72,208 shares were allotted to a total of 15 anchor investors. The allocation was done at the upper IPO price band of Rs.80 (par value Rs1 + premium Rs79), which resulted in an overall allocation of Rs.139.22 crore. In other words, the anchors have already absorbed 45% of the total issue size, which is indicative of the robust institutional demand.

Listed below are the 10 anchor investors based on over 5% anchor allocation each in the IPO. Out of the total anchor allocation of Rs.139.22 crore, these 10 major anchor investors accounted for 84.92% of the overall anchor allocation.

The company, Tracxn Technologies Ltd is not too active in the grey market, so the GMP is not available. However, informal sources as well as the anchor allotment response suggests a positive listing for the stock. 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. Tracxn Technologies Ltd has been predominantly absorbed by the Indian mutual funds and insurers with limited participation from the global names. Mutual funds accounted for 43.25% of the anchor book response while FPIs, insurance companies and other investors accounted for the balance. 

Key domestic investors participating in the anchor placement included Nippon India Fund, Kotak MF, ICICI Prudential MF, Whiteoak Capital MF, Kotak Life Insurance and Reliance General Insurance. Other investors included names like Ashoka Equity, India Acorn, Abakkus Fund, MOSL and BNP Paribas Arbitrage.

Out of the total 174.02 lakh shares allotted by way of anchor placement, Tracxn Technologies Ltd allotted a total of 75.27 lakh shares to 6 domestic mutual fund schemes across 4 asset management companies (AMCs). The mutual fund allocation represents 43.25% of the overall anchor allocation.