Blue Jet Healthcare IPO: Anchor Allocation Set at 30%

About Blue Jet Healthcare IPO

Blue Jet Healthcare IPO opens on 25th October 2023 and closes on 27th October 2023; both days inclusive. The stock has a face value of ₹2 per share and the price band for the book building IPO has been set in the band of ₹329 to ₹346 per share. The final price will be discovered in this band through the process of book building. The IPO of Blue Jet Healthcare Ltd will be entirely an offer for sale (OFS) with no fresh issue component in the IPO.

The offer for sale (OFS) component comprises the issue of 2,42,85,160 shares (242.85 lakh shares approximately), which at the upper price band of ₹346 per share will translate into total OFS size of ₹840.27 crore. Since there is no fresh issue portion in the IPO of Blue Jet Healthcare Ltd, the OFS component of 2,42,85,160 shares (242.85 lakh shares approximately), at the upper price band of ₹346 per share worth ₹840.27 crore will also be the overall size of the IPO.

A brief on the anchor allocation of Blue Jet Healthcare IPO

The anchor issue of Blue Jet Healthcare IPO saw a relatively strong response on 23rd October 2023 with 30% of the IPO size getting absorbed by the anchors. Out of the 2,42,85,160 shares (242.85 lakh shares approximately) on offer, the anchors picked up 72,85,548 shares (72.86 lakh shares approximately) accounting for 30% of the total IPO size. The anchor placement reporting was made to the BSE late on Monday, October 23rd, 2023; two days ahead of the IPO opening, since October 24, 2023 is a trading and bank holiday on account of Dussehra. The IPO of Blue Jet Healthcare Ltd opens on 25th October 2023 in the price band of ₹329 to ₹346 and will close for subscription on 27th October 2023.

The entire anchor allocation was made at the upper price band of ₹346 per share. This includes the face value of ₹2 per share plus a premium of ₹344 per share, taking the anchor allocation price to ₹346 per share. Let us focus on the anchor allotment portion ahead of the Blue Jet Healthcare IPO, which saw the anchor bidding opening and also closing on 23-Oct-2023. Prior to the anchor allocation, here is how the overall allocation looked.

Here it must be noted that the 72,85,548 shares (72.86 lakh shares approximately) issued to the anchor investors on 23rd October 2023, will be reduced from the QIB quota above of 121.43 lakh shares and only the residual amount would be available to QIBs in the IPO. The overall allocation to QIBs includes the anchor portion, so the anchor shares allotted will be 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. Here are details of the anchor lock-in for the issue of Blue Jet Healthcare 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 to investors in Blue Jet Healthcare IPO

On 23th October 2023, Blue Jet Healthcare 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 72,85,548 shares were allotted to a total of 22 anchor investors. The allocation was done at the upper IPO price band of ₹346 per share (including premium of ₹344 per share) which resulted in an overall anchor allocation of ₹252.08 crore. The anchors have already absorbed 30% of the total issue size of ₹840.27 crore, which is indicative of fairly robust institutional demand.

Listed below are the 22 anchor investors who got allotted the entire 100% anchor allocation portion ahead of the IPO of Blue Jet Healthcare Ltd. The entire anchor allocation of ₹252.08 crore was spread across a total of 22 major anchor investors, with robust participation from domestic mutual funds, domestic insurers and FPIs.

Data Source: BSE Filings (Anchor value is in ₹ in crore)

Overall, the anchors absorbed 30% of the total issue size. 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. Blue Jet Healthcare Ltd did manage to elicit anchor interest from the FPIs, domestic mutual funds and the domestic insurance companies.

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 72,85,548 shares allocated to the anchors in the IPO, a total of 32,29,687 shares were allocated to domestic mutual funds registered with SEBI. This allocation was spread across 8 mutual fund schemes across 5 asset management companies (AMCs). The mutual fund allocation in the anchor portion amounted to 44.3% of the total anchor allocation size.

The issue opens for subscription on 25th October 2023 and closes for subscription on 27th October 2023 (both days inclusive). The basis of allotment will be finalized on 01st November 2023 and the refunds will also be initiated on 01st November 2023. In addition, the demat credits are expected to happen on 03rd November 2023 and the stock will list on 06th November 2023 on the NSE and the BSE.