Ideaforge Technology IPO gets 45% anchor allocated

The anchor issue of Ideaforge Technology Ltd saw a robust response on 23rd June 2023 with 45% of the IPO size getting absorbed by the anchors. Out of the 84,37,500 shares on offer, the anchors picked up 37,92,894 shares accounting for 45% of the total IPO size. The anchor placement reporting was made to the BSE late on Friday. Ideaforge Technology IPO opens on 26th June 2023 in the price band of ₹638 to ₹672 and will close for subscription on 29th June 2023 (both days inclusive). The entire anchor allocation was made at the upper price band of ₹672. Let us focus on the anchor allotment portion ahead of the Ideaforge Technology 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 Ideaforge Technology Ltd

On 23rd June 2023, Ideaforge Technology 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 37,92,894 shares were allotted to a total of 31 anchor investors. The allocation was done at the upper IPO price band of ₹672 per share which resulted in an overall allocation of ₹254.88 crore. The anchors have already absorbed almost 45% of the total issue size of ₹567 crore, which is indicative of the robust institutional demand.

Listed below are the 12 anchor investors who got allotted at least 3% of the total anchor allocation individually. The entire anchor allocation of ₹254.88 crore was spread across 31 major anchor investors. These top 12 anchor investors with more than 3% each listed below accounted for 55.03% of the total anchor allocation of Ideaforge Technology Ltd.

Data Source: BSE Filings

While the GMP has remained stable after falling to ₹465, it shows an attractive and robust grey market premium of 69.2% on listing. This has led to reasonable 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. Ideaforge Technology Ltd has been a mix, getting good response from FPIs but it has also got extremely strong response from the domestic mutual funds and the domestic insurance companies, considering its product positioning in the Indian market. The number and spread of the Foreign Portfolio Investors have been fairly healthy in this case.

With strong SIP flows, most equity funds are flush with cash at this point of time and that has helped the MF appetite for anchor allocation in this IPO of Ideaforge Technology Ltd. ICICI Prudential Mutual Fund, Invesco, HSBC Mutual Fund, Axis MF, Mirae MF, HDFC MF, Bandhan MF and Kotak were some of the prominent mutual funds to get allocations in the anchor portion. Apart from insurers being active in the counter, even foreign portfolio investors (FPIs) like Pinebridge, Nomura, Ashoka India Equity Fund, BNP Paribas Arbitrage, Goldman Sachs and Carmignac Portfolio were some of the prominent FPIs as anchors.

Out of the total 37,92,894 shares allotted by way of anchor placement, Ideaforge Technology Ltd allotted a total of 19,18,668 shares to 18 domestic mutual fund schemes across 12 AMCs. The mutual fund allocation represents 50.59% of the overall anchor allocation ahead of the IPO of Ideaforge Technology Ltd.

Here is a quick background on Ideaforge Technology Ltd. Ideaforge Technology was Incorporated in 2007 to manufacture Unmanned Aircraft Systems (UAS); better known as drones. It manufactures Unmanned Aircraft Vehicles for Mapping, Security & Surveillance. These drones are capable of a wide range of mining area planning, and mapping applications; apart from helping in construction and real estate businesses. In addition, these drones also assist the defence forces in conducting Intelligence, Surveillance, and Reconnaissance (ISR) operations along some of the key sensitive international borders.