Fusion Micro Finance Ltd IPO gets 30% anchor allocated

Fusion Microfinance Anchor allotment
Fusion Microfinance Anchor allotment

IPOs
by 5paisa Research Team Last Updated: 2022-11-02T16:25:02+05:30

The anchor issue of Fusion Micro Finance Ltd saw a robust response on 01st November 2022 with 45% of the IPO size getting absorbed by the anchors. Out of the 2,99,99,728 shares on offer, the anchors picked up 89,99,943 shares accounting for 30% of the total IPO size. The anchor placement reporting was made to the BSE late on Tuesday. Fusion Micro Finance IPO opened on 02nd November 2022 in the price band of Rs.350 to Rs.368 and will close for subscription on 04th November 2022 (both days inclusive). The entire anchor allocation was made at the upper price band of Rs368. Let us focus on the anchor allotment portion ahead of the Fusion Micro Finance 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 Fusion Micro Finance Ltd


On 01st November 2022, Fusion Micro Finance 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 89,99,943 shares were allotted to a total of 17 anchor investors. The allocation was done at the upper IPO price band of Rs.368 which resulted in an overall allocation of Rs.331.20 crore. The anchors have already absorbed 30% of the total issue size of Rs1,103.99 crore, which is indicative of the robust institutional demand. The top 2 anchors took 24.18% of the anchor allocation.


Listed below are the 10 anchor investors out of the 17 anchor investors who were allotted more than 5% of the anchor portion. The entire anchor allocation of Rs.331.20 crore was spread across these 17 major anchor investors. All the allocations below were done at the upper price band of Rs368 per share.

Anchor Investor

No. of Shares

% of Anchor Portion

Value Allocated

Nippon India Small Cap Fund

10,88,280

12.09%

Rs.40.05 crore

Nomura India Stock Mother Fund

10,88,280

12.09%

Rs.40.05 crore

Massachusetts Institute of Technology

815,200

9.06%

Rs.30.00 crore

HDFC Life Insurance Company

679,360

7.55%

Rs.25.00 crore

Motilal Oswal Mid Cap Fund

625,000

6.94%

Rs.23.00 crore

BNP Paribas Arbitrage (ODI)

570,727

6.34%

Rs.21.00 crore

ICICI Prudential Banking Fund

544,160

6.05%

Rs.20.03 crore

Birla Sun Life Banking and Fin Fund

544,160

6.05%

Rs.20.03 crore

ICICI Prudential Multicap Fund

544,120

6.05%

Rs.20.02 crore

Birla Sun Life Small Cap Fund

544,120

6.05%

Rs.20.02 crore

Data Source: BSE Filings


The above 10 anchor investors accounted for 78.27% of the total anchor allocation book to the investors. While the GMP has remained stable around Rs38 per share, it shows a relatively sound premium of 10.33% 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. Fusion Micro Finance Ltd has been a mix, getting good response from limited number of FPIs and predominantly from domestic mutual funds. With strong SIP flows into equity funds, most of the mutual funds are flush with cash at this point of time and that has helped the appetite for anchor allocation in this IPO of Fusion Micro Finance Ltd.


Out of the total 89,99,943 shares allotted by way of anchor placement, Fusion Micro Finance Ltd allotted a total of 42,97,400 shares to 8 domestic mutual fund schemes across 5 AMCs. The mutual fund allocation represents 47.75% of the overall anchor allocation.


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