DCX Systems Ltd IPO gets 45% anchor allocated

Anchor allocation of DCX Systems Ltd
Anchor allocation of DCX Systems Ltd

IPOs
by 5paisa Research Team Last Updated: 2022-10-31T08:50:07+05:30

The anchor issue of DCX Systems Ltd saw a robust response on 28th October 2022 with 45% of the IPO size getting absorbed by the anchors. Out of the 2,41,54,588 shares on offer, the anchors picked up 1,08,69,564 shares accounting for 45% of the total IPO size. The anchor placement reporting was made to the BSE late on Friday. DCX Systems IPO Ltd opens on 31st October 2022 in the price band of Rs.197 to Rs.207 and will close for subscription on 02nd November 2022 (both days inclusive). The entire anchor allocation was made at the upper price band of Rs207. Let us focus on the anchor allotment portion ahead of the DCX Systems 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 DCX Systems Ltd


On 28th October 2022, DCX Systems 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 1,08,69,564 shares were allotted to a total of 12 anchor investors. The allocation was done at the upper IPO price band of Rs.207 which resulted in an overall allocation of Rs.225 crore. The anchors have already absorbed 45% of the total issue size of Rs500 crore, which is indicative of the robust institutional demand. The top 2 anchors took half of the anchor allocation.


Listed below are the 12 anchor investors who constituted the successful bidders for the anchor portion of the IPO. The entire anchor allocation of Rs.225 crore was spread across these 12 major anchor investors.

 

Anchor Investor

No. of Shares

% of Anchor Portion

Value Allocated

Volrado Venture Partners Fund

29,95,128

27.56%

Rs.62.00 crore

HDFC Large & Mid Cap Fund

24,15,384

22.22%

Rs.50.00 crore

Motilal Oswal Select Opportunities Fund

869,544

8.00%

Rs.18.00 crore

Cohesion MK Best Ideas Trust

772,992

7.11%

Rs.16.00 crore

Motilal Oswal Mid Cap Fund

724,608

6.67%

Rs.15.00 crore

Quantum State Investment Fund

676,296

6.22%

Rs.14.00 crore

HDFC Infrastructure Fund

483,120

4.44%

Rs.10.00 crore

India SME Investment Funs

386,509

3.56%

Rs.8.00 crore

Theleme India Master Fund

386,496

3.56%

Rs.8.00 crore

Resonance Opportunities Fund

386,496

3.56%

Rs.8.00 crore

Vikasa India EIF Fund

386,496

3.56%

Rs.8.00 crore

BNP Paribas Arbitrage ODI

386,496

3.56%

Rs.8.00 crore

Total Allocation to Anchors

1,08,69,564

100.00%

Rs.225.00 crore

Data Source: BSE Filings


While the GMP has remained stable between Rs78 and Rs80, it shows an attractive premium of 37% to 39% on listing. This has led to strong anchor response with the anchors taking in 45% 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. DCX Systems Ltd has been a mix, getting good response from FPIs and domestic mutual funds. Mutual funds and FPIs were not too many, but that could be more because the overall size of the issue is quite small. With strong SIP flows, most of the equity funds are flush with cash at this point of time and that has helped the appetite for anchor allocation in this IPO of DCX Systems Ltd.


Out of the total 1,08,69,564 shares allotted by way of anchor placement, DCX Systems Ltd allotted a total of 36,23,113 shares to 3 domestic mutual fund schemes across 2 AMCs. The mutual fund allocation represents 33.33% of the overall anchor allocation.
 


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