Motisons Jewellers IPO : Anchor Allocation at 24.03 %

About the Motisons Jewellers Ltd IPO

The IPO of Motisons Jewellers Ltd opens for subscription on December 18, 2023 and closes on December 20, 2023. The stock of Motisons Jewellers 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 ₹52 to ₹55 per share. The final price will be discovered within this band. The IPO of Motisons Jewellers Ltd will be entirely a fresh issue of shares with no offer for sale (OFS) component. The fresh issue will infuse funds into the company, but is also EPS and equity dilutive. The fresh issue portion of the IPO of Motisons Jewellers Ltd comprises the issue of 2,74,71,000 shares (274.71 lakh shares), which at the upper price band of ₹55 per share will translate into an offer for sale (OFS) size of ₹151.09 crore. Since there is no offer for sale (OFS) component in the IPO, the fresh issue portion will also be the overall size of the IPO. The overall IPO of Motisons Jewellers Ltd will comprise the issue of 2,74,71,000 shares (274.71 lakh shares), which at the upper price band of ₹55 per share translates into IPO size of ₹151.09 crore.

The company had done pre-IPO placement of 60 lakh shares at a price of ₹55 per share to key investors, resulting in total pre-IPO placement size of ₹33 crore. Consequently, the total shares available for the public offer of Motisons Jewellers Ltd were proportionately reduced from 334.71 lakh shares to 274.71 lakh shares. That is how the current issue size is arrived at. The IPO of Motisons Jewellers Ltd will be listed on the NSE and the BSE on the IPO mainboard. The fresh issue portion will be largely utilized to repay borrowings from commercial banks and for funding the working capital needs of the company, while part of the funds will also be used for general corporate purposes. The IPO will be lead managed by Holani Consultants Private Ltd. Link Intime India Private Ltd will be the registrar to the issue.

A brief on the anchor allocation of Motisons Jewellers Ltd

The anchor issue of Motisons Jewellers Ltd saw a relatively strong response on 15th December 2023 with 24.03% of the IPO size getting absorbed by the anchors. Out of 2,74,71,000 shares (274.71 lakh shares) on offer, the anchors picked up 66,00,000 shares (66 lakh shares) accounting for 24.03% of the total IPO size. The anchor placement reporting was made to the BSE late on Friday, December 15th, 2023; one working day ahead of the IPO opening on Wednesday, 18th December 2023. The IPO of Motisons Jewellers Ltd opens on 18th December 2023 in the price band of ₹52 to ₹55 and will close for subscription on 20th December 2023. 

The entire anchor allocation was made at the upper price band of ₹55 per share. This includes the face value of ₹10 per share plus a premium of ₹45 per share, taking the anchor allocation price to ₹55 per share. Let us focus on the anchor allotment portion ahead of the Motisons Jewellers Ltd IPO, which saw the anchor bidding opening and also closing on 15th December 2023. Post the anchor allocation, here is how the overall allocation looked.

Here it must be noted that the 66,00,000 shares issued to the anchor investors on 15th December 2023, 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. 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 Motisons Jewellers 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 Motisons Jewellers Ltd

On 15th December 2023, Motisons Jewellers 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 66,00,000 shares were allotted to a total of 2 anchor investors. The allocation was done at the upper IPO price band of ₹55 per share (including premium of ₹45 per share) which resulted in an overall anchor allocation of ₹36.30 crore. The anchors have already absorbed 24.03% of the total issue size of ₹151.09 crore, which is indicative of fairly robust institutional demand.  

Listed below are the 2 anchor investors who, have been allotted shares as part of the anchor portion of the IPO of Motisons Jewellers Ltd. The entire anchor allocation of ₹36.30 crore was spread across just 2 major anchor investors. Both the anchor names have been included in the table below.

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

The above list only includes the complete set of 2 anchor investors who got allotted shares in the anchor portion done ahead of the Motisons Jewellers Ltd IPO. The detailed and comprehensive report on the anchor allocation with the mutual fund portion separated can be accessed by clicking on the link below.

https://www.bseindia.com/markets/MarketInfo/DownloadAttach.aspx?id=20231215-20&attachedId=206db1d7-0e1f-4c33-aa97-f9b6e8465f0d

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 24.03% 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. However, there were only 2 applicants for the IPO this time around. There is no dedicated mutual fund allocation as part of the IPO.