Premier Energies IPO: Anchor Allocation at 30%

About Premier Energies IPO

Premier Energies IPO is a book-built issue of ₹2,830.40 crores. It consists of a fresh issue of 2.87 crore shares aggregating ₹1,291.40 crores and an offer for sale of 3.42 crore shares aggregating ₹1,539.00 crores.
The issue opens for subscription on 27th August 2024 and closes on 29th August 2024. The allotment for the Premier Energies IPO is expected to be finalised on Friday, 30th August 2024. The Premier Energies IPO will list on BSE and NSE, with a tentative listing date fixed as Tuesday, 3rd September 2024.

Premier Energies IPO price band is set at ₹427 to ₹450 per share. The minimum lot size for an application is 33 Shares. The minimum amount of investment required by retail investors is ₹14,850. The minimum lot size investment for sNII is 14 lots (462 shares), amounting to ₹207,900; for bNII, it is 68 lots (2,244 shares), amounting to ₹1,009,800.
Kotak Mahindra Capital Company Limited, J.P. Morgan India Private Limited, and ICICI Securities Limited are the book-running lead managers of the Premier Energies IPO, while Kfin Technologies Limited is the registrar for the issue.

A brief on the Anchor Allocation of Premier Energies IPO

The anchor issue of Premier Energies IPO saw a strong response on 26th August 2024, with 30% of the IPO size getting absorbed by the anchors. Out of 62,675,554 shares on offer, the anchors picked up 18,802,666 shares, accounting for 30% of the total IPO size. The anchor placement reporting was made to the BSE on Monday, 26th August 2024, one working day ahead of the IPO opening on Tuesday, 27th August 2024.

The entire anchor allocation was made at the upper end of the price band of ₹450 per share. This includes the face value of ₹1 per share plus a share premium of ₹449 per share, taking the anchor allocation price to ₹450 per share. After the anchor allocation, here is how the overall allocation looked:

Finer points of the Anchor Allocation Process

The anchor placement ahead of an IPO differs from a pre-IPO placement in that the anchor allocation has a lock-in period of 30 days for 50% of the shares and 90 days for the remaining shares. It gives investors confidence that large, established institutions back the issue. Here are details of the anchor lock-in for the Premier Energies Limited issue:

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 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 the book-building process is higher than the Anchor Investor Allocation Price, then the Anchor investors will be required to pay the difference by the Anchor Investor Pay-in Date as specified in the revised CAN."

An anchor investor in an IPO is normally a qualified institutional buyer (QIB), like a foreign portfolio investor mutual fund, insurance company, or sovereign fund, which invests before the IPO is made available to the public as per SEBI regulations. The 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 the price discovery of the IPO.

Anchor Allocation investors in Premier Energies IPO

On 26th August 2024, Premier Energies IPO completed the bidding for its anchor allocation. There was a robust response as the anchor investors participated in the book-building process. A total of 18,802,666 shares were allotted to 60 anchor investors. The allocation was done at ₹450 per share, resulting in an overall anchor allocation of ₹846.12 crore. The anchors have already absorbed 30% of the total issue size, indicating strong institutional demand.

Listed below are the 25 anchor investors who have been allotted 2% or more of the anchor allocation before Premier Energies IPO. These 25 anchor investors accounted for 72.8% of the total anchor allocation of ₹846.12 crore. The detailed allocation is captured in the table below:

BSE 

The anchor response normally sets the tone for retail participation in the IPO, which has been very strong this time. Out of the 18,802,666 shares allocated to the anchors in the IPO, 8,834,356 shares were allocated to 17 domestic mutual funds. This allocation was spread across 37 mutual fund schemes belonging to 17 asset management companies (AMCs) in India. The mutual fund allocation in the anchor portion amounted to 46.98% of the total anchor size.

Read About Premier Energies IPO

Key Dates for Premier Energies IPO and How to Apply?

The issue opens for subscription on 27th August 2024 and closes for subscription on 29th August 2024 (both days inclusive). The basis of allotment will be finalised on 30th August 2024, and the refunds will be initiated on 2nd September 2024. In addition, the demat credits are expected to happen on 2nd September 2024, and the stock will be listed on 3rd September 2024 on the NSE and the BSE. Premier Energies Limited will test India's appetite for renewable energy stocks. The credits to the Demat account to the extent of shares allotted will happen by the close of 2nd September 2024.

The issue is a combination of a fresh issue of 28,697,777 shares aggregating to ₹1,291.40 crore and an offer for sale of 34,200,000 shares aggregating to ₹1,539.00 crore. The price band is set at ₹427 to ₹450 per share. The minimum lot size for an application is 33 Shares. The minimum amount of investment required by retail investors is ₹14,850. The minimum lot size investment for small NIIs is 14 lots (462 shares), amounting to ₹207,900, and for big NIIs, it is 68 lots (2,244 shares), amounting to ₹1,009,800.

Kotak Mahindra Capital Company Limited, J.P. Morgan India Private Limited and ICICI Securities Limited are the book-running lead managers of the Premier Energies Limited IPO, while Kfin Technologies Limited is the registrar for the issue.