Electronic Mart India Ltd IPO gets 30% anchor allocated

Anchor Placement of Electronic Mart India Ltd
Anchor Placement of Electronic Mart India Ltd

IPOs
by 5paisa Research Team Last Updated: 2022-10-07T12:58:57+05:30

The anchor issue of Electronic Mart India Ltd saw a robust response on 03rd October 2022 with 30% of the IPO size getting absorbed by the anchors. The announcement was made late on Monday. The IPO of Electronic Mart India Ltd opens on 04th October 2022 in the price band of Rs.56 to Rs.59 and will close for subscription on 07th October 2022 due to a holiday coming in between. Let us focus on the anchor allotment portion ahead of the Electronic Mart 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 Electronic Mart India Ltd


On 03rd October 2022, Electronic Mart India 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 2,54,23,728 shares were allotted to a total of 20 anchor investors. The allocation was done at the upper IPO price band of Rs.59 which resulted in an overall allocation of Rs.150.00 crore. The anchors have already absorbed 30% of the total issue size, which is indicative of the robust institutional demand.


Listed below are the 10 anchor investors based on the percentage of anchor allocation each in the IPO. Out of the total anchor allocation of Rs.150.00 crore, these 10 major anchor investors accounted for 71.84% of the overall anchor allocation.

 

Anchor Investor

No. of Shares

% of Anchor Portion

Value Allocated

Nippon India Flexicap Fund

30,50,794

12.00%

Rs.18.00 crore

HDFC Opportunities Fund

25,42,286

10.00%

Rs.15.00 crore

Pinebridge India Equity Fund

25,42,286

10.00%

Rs.15.00 crore

Ashoka India Equity Fund

16,94,942

6.67%

Rs.10.00 crore

Mirae Asset Great Consumer Fund

16,94,942

6.67%

Rs.10.00 crore

Motilal Oswal Mid Cap Fund

16,94,942

6.67%

Rs.10.00 crore

Aditya Birla Sun Life Insurance

16,94,942

6.67%

Rs.10.00 crore

Tata India Consumer Fund

13,55,852

5.33%

Rs.8.00 crore

Whiteoak Capital Flexi Cap Fund

11,43,508

4.50%

Rs.6.75 crore

Sundaram Equity Savings Fund

8,47,598

3.33%

Rs.5.00 crore

While the GMP has fallen from Rs33 to Rs31 in the last couple of days, the GMP still shows a 52.5% premium on listing. This has led to strong anchor response with the anchors taking in 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. Electronic Mart India Ltd has been a mix, getting good response from FPIs and domestic mutual funds. Mutual funds accounted for almost 60% of the anchor book response while FPIs and other investors accounted for the balance. Apart from the mutual funds, some of the other investors in the anchor placement included Pinebridge Global Funds, Ashoka India Equity, Abakkus Emerging Opportunities Fund, Cohesion MK Best Ideas Fund and Societe Generale (ODI) account. 


Out of the total 254.24 lakh shares allotted by way of anchor placement, Electronic Mart India Ltd allotted a total of 152.54 lakh shares to 12 domestic mutual fund schemes across 7 asset management companies (AMCs). The mutual fund allocation represents 60% of the overall anchor allocation.

Also Read:-

Checkout Electronics Mart IPO GMP Today

7 things about Electronics Mart IPO


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