Go Digit IPO: Anchor Allocation at 45%

About the Go Digit General Insurance IPO

Go Digit General Insurance IPO will be open from May 15th, 2024 to May 17th, 2024; both days inclusive. The stock of Go Digit General Insurance Ltd has a face value of ₹10 per share and the price band for the book building IPO has been set in the range of ₹258 to ₹272 per share. The IPO of Go Digit General Insurance Ltd will be a combination of a fresh issue of shares and offer for sale (OFS) component. The fresh issue tends to bring in fresh funds into the company, but is also EPS and equity dilutive, while the OFS is just a transfer of ownership. The fresh issue portion of the IPO of Go Digit General Insurance Ltd comprises the issue of 4,13,60,294 shares (413.60 lakh shares approximately), which at the upper price band of ₹272 per share will translate into a fresh issue size of ₹1,125 crore. The offer for sale (OFS) portion of the IPO of Go Digit General Insurance Ltd comprises the sale / offer of 5,47,66,392 shares (547.66 lakh shares approximately), which at the upper price band of ₹272 per share will translate into an OFS size of ₹1,489.65 crore.

Out of the OFS size of 547.66 lakh shares, the promoter shareholder (Go Digit Infoworks Services Private Ltd) will be selling bulk of 547.56 shares. The balance 10,778 shares will be sold by 3 investor shareholders in the company. Thus, the total IPO of Go Digit General Insurance Ltd will comprise of a fresh issue and an OFS of 9,61,26,686 shares (961.27 lakh shares approximately) which at the upper end of the price band of ₹272 per share aggregates to total issue size of ₹2,614.65 crore. The IPO of Go Digit General Insurance Ltd will be listed on the NSE and the BSE on the IPO mainboard.

The fresh funds will be used for funding its digital and omnichannel growth in future and to spruce up its capital base. The promoters of Go Digital General Insurance Ltd are Kamlesh Goyal, Go-Digit Infoworks Services Private Ltd, Oben Ventures LLP, and FAL Corporation. Virat Kohli and Anushka  Sharma have also invested in the company. The IPO will be lead managed by ICICI Securities, Morgan Stanley India, Axis Capital, HDFC Bank, IIFL Securities, and Nuvama Wealth Management; while Link Intime India Private Ltd will be IPO registrar.

Read more about Go Digit IPO

A brief on the anchor allocation of Go Digit General Insurance Ltd

The anchor issue of Go Digit IPO saw a relatively strong response on 14th May 2024 with 45.00% of the IPO size getting absorbed by the anchors. Out of 9,61,26,786 shares (961.27 lakh shares approximately) on offer, the anchors picked up 4,32,57,009 shares (432.57 lakh shares approximately) accounting for 45.00% of the total IPO size. The anchor placement reporting was made to the BSE late on Tuesday, 14th May 2024; one working day ahead of the IPO opening on Wednesday, 15th May 2024.

The entire anchor allocation was made at the upper end of the price band of ₹272 per share. This includes the face value of ₹10 per share plus a share premium of ₹262 per share, taking the anchor allocation price to ₹272 per share. Let us focus on the anchor allotment portion ahead of the Go Digit General Insurance Ltd IPO, which saw the anchor bidding opening and also closing on 14th May 2024. Post the anchor allocation, here is how the overall allocation looked.

Here it must be noted that the 4,32,57,009 shares allocated to the anchor investors on 14th May 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 Go Digit General Insurance 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 Go Digit General Insurance Ltd

On 14th May 2024, Go Digit General Insurance 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 4,32,57,009 shares were allotted to a total of 56 anchor investors. The allocation was done at the upper IPO price band of ₹272 per share (including premium of ₹262 per share) which resulted in an overall anchor allocation of ₹1,176.59 crore. The anchors have already absorbed 45.00% of the total issue size of ₹2,614.65 crore, which is indicative of fairly robust institutional demand.

Listed below are the 22 anchor investors who, have been allotted 2% or more of the anchor allocation done ahead of the IPO of Go Digit General Insurance Ltd. The entire anchor allocation of ₹1,176.59 crore was spread across a total of 56 major anchor investors, with only 22 anchor investors getting more than 2% each out of the anchor allocation quota. While there were 56 anchor investors in all, only the 22 anchor investors who got allocated 2% or more each of the anchor quota are listed in the table below. These 22 anchor investors accounted for 74.51% of the total anchor collection of  ₹1,176.59 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 22 anchor investors who got allotted shares of 2% or above each of the anchor portion done ahead of the Go Digit General Insurance Ltd IPO. In fact, there were 56 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=20240514-77&attachedId=e73ef530-5a28-43fa-815d-9f3dac7602d6

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. Go Digit General Insurance 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 Go Digit General Insurance 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 4,32,57,009 shares allocated to the anchors in the IPO, a total of 1,44,96,570 shares were allocated to domestic mutual funds registered with SEBI. This allocation was spread across 23 mutual fund schemes belonging to 11 asset management company (AMCs). The mutual fund allocation in the anchor portion amounted to 33.51% of the total anchor size.

Key dates for Go Digit General Insurance IPO and how to apply?

The issue opens for subscription on 15th May 2024 and closes for subscription on 17th May 2024 (both days inclusive). The basis of allotment will be finalized on 21st May 2024 and the refunds will be initiated on 22nd May 2024. In addition, the demat credits are expected to also happen on 22nd May 2024 and the stock will list on 23rd May 2024 on the NSE and the BSE. Go Digit General Insurance Ltd will test the appetite for private sector insurance originating stocks in India. The credits to the demat account to the extent of shares allotted will happen by the close of 22nd May 2024 under ISIN (INE03JT01014).