Akme Fintrade India IPO: Anchor Allocation at 28.50%

About the Akme Fintrade IPO

Akme Fintrade India IPO will be open from June 19th, 2024 to June 21st, 2024; both days inclusive. The stock of Akme Fintrade India Ltd has a face value of ₹10 per share and the price band for the book building IPO has been set in the range of ₹114 to ₹120 per share. The IPO of Akme Fintrade India Ltd will be entirely a fresh issue of shares with no offer for sale (OFS) component. The fresh issue brings in fresh funds into the company, but is also EPS and equity dilutive. OFS is just a transfer of ownership. The fresh issue portion of the IPO of Akme Fintrade India Ltd comprises the issue of 1,10,00,000 shares (110.00 lakh shares), which at the upper price band of ₹120 per share will translate into a fresh issue size of ₹132.00 crore. 

Since there is no offer for sale portion, the fresh issue portion will also double up as the total issue size. Therefore, the total IPO of Akme Fintrade India Ltd will comprise of a fresh issue 1,10,00,000 shares (110.00 lakh shares) which at the upper end of the price band of ₹120 per share aggregates to total issue size of ₹132.00 crore. Akme Fintrade India IPO will be listed on the NSE and the BSE on the IPO mainboard. The fresh funds will be used for augmenting the capital base of the company to support future growth in the asset book. The promoters of the company include Nirmal Jain, Manju Jain, Dipesh Jain, and Nirmal Kumar Jain HUF. The promoters currently have a 56.01% stake in the company, which will get diluted post IPO to 41.57%. The IPO will be lead managed by Gretex Corporate Services Ltd; while Bigshare Services Private Ltd will be IPO registrar.

A brief on the anchor allocation of Akme Fintrade IPO

The anchor issue of Akme Fintrade Ltd saw a relatively strong response on 18th June 2024 with 28.50% of the IPO size getting absorbed by the anchors. Out of 1,10,00,000 shares (110.00 lakh shares) on offer, the anchors picked up 31,35,000 shares (31.35 lakh shares) accounting for 28.50% of the total IPO size. The anchor placement reporting was made to the BSE late on Tuesday, 18th June 2024; one working day ahead of the IPO opening on Wednesday, 19th June 2024. 

The entire anchor allocation was made at the upper price band of ₹120 per share. This includes the face value of ₹10 per share plus a share premium of ₹110 per share, taking the anchor allocation price to ₹120 per share. Let us focus on the anchor allotment portion ahead of the Akme Fintrade Ltd IPO, which saw the anchor bidding opening and also closing on 18th June 2024. Post the anchor allocation, here is how the overall allocation looked.

Data Source: Company RHP

Here it must be noted that the 31,35,000 shares allocated to the anchor investors on 18th June 2024, were actually reduced from the original QIB quota; and only the residual amount would be available to QIBs in the IPO. That change has been reflected in the table above, with the QIB IPO portion reduced to the extent of the anchor allocation. As a result, the QIB quota available in the IPO has reduced from 47.50% before the anchor allocation to 19.00% after the anchor allocation. The overall allocation to QIBs includes the anchor portion, so the anchor shares allotted has been 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. It is the presence of institutional investors like mutual funds and foreign portfolio investors (FPIs) that gives confidence to the retail investors. Here are details of the anchor lock-in for the issue of Akme Fintrade 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 investors in Akme Fintrade IPO

On 18th June 2024, Akme Fintrade 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 31,35,000 shares were allotted to a total of 4 anchor investors. The allocation was done at the upper IPO price band of ₹120 per share (including premium of ₹110 per share) which resulted in an overall anchor allocation of ₹37.62 crore. The anchors have already absorbed 28.50% of the total issue size of ₹132.00 crore, which is indicative of fairly robust institutional demand. 

Listed below are the 4 anchor investors who, have all been allotted 13% or more of the anchor allocation done ahead of the IPO of Akme Fintrade Ltd. The entire anchor allocation of ₹37.62 crore was spread across a total of 4 major anchor investors and all the 4 anchor investors got more than 13% each out of the anchor allocation quota. While there were 4 anchor investors in total, all the 4 anchor investors who got allocated 13% or more each of the anchor quota are listed in the table below. These 4 anchor investors accounted for 100% of the total anchor collection of  ₹37.62 crore. The detailed allocation is captured in the table below, indexed descending on size of anchor allocation.

Data Source: BSE Filings (Value Allocated in ₹ in Crore)

In fact, there were only 4 anchor investor in all; with all the anchor investors getting more than 13% each of the anchor quota being mentioned in the list above. The detailed and comprehensive report on the anchor allocation with the mutual fund portion separated (if any) can be accessed by clicking on the link below.

https://www.bseindia.com/markets/MarketInfo/DownloadAttach.aspx?id=20240618-39&attachedId=7f82fa0d-4456-4891-b127-a48c1f98919b

The detailed report is available in PDF format and can be downloaded by clicking on the link above. Alternatively, readers can also opt to cut this link and paste in their browser, in case the link is not directly clickable. The details of the anchor allocation can also be accessed in the Notices section of the BSE on its website www.bseindia.com.
Overall, the anchors absorbed 28.50% of the total issue size. The QIB portion in the IPO has already been 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. Akme Fintrade Ltd saw a good deal of buying interest from the alternate investment funds (AIFs) while the other categories of investors were largely absent in the bidding for the anchor allocation. As stated, there was no allocation made to any of the domestic mutual funds registered with the SEBI or any of the insurance companies registered with the IRDAI.

Key dates for Akme Fintrade IPO and how to apply?

The issue opens for subscription on 19th June 2024 and closes for subscription on 21st June 2024 (both days inclusive). The basis of allotment will be finalized on 24th June 2024 and the refunds will be initiated on 25th June 2024. In addition, the demat credits are expected to also happen on 25th June 2024 and the stock will list on 26th June 2024 on the NSE and the BSE. Akme Fintrade Ltd will test the appetite for such micro finance stocks. The credits to the demat account to the extent of shares allotted will happen by the close of 25th June 2024 under ISIN (INE916Y01019).