Mukka Proteins IPO Anchor Allocation at 30%

About the Mukka Proteins IPO

The stock of Mukka Proteins IPO  has a face value of ₹1 per share and the price band for the book building IPO has been set in the range of ₹26 to ₹28 per share. Mukka Proteins IPO will be entirely a fresh issue of shares with no offer for sale (OFS) component. A fresh issue tends to bring in fresh funds into the company, but is also EPS and equity dilutive. On the other hand, OFS is just a transfer of ownership. The fresh issue portion of the IPO of Mukka Proteins Ltd comprises the issue of 8,00,00,000 shares (800 lakh shares), which at the upper price band of ₹28 per share will translate into a fresh issue size of ₹224 crore. In the absence of any offer for sale, the fresh issue will also double up as the overall issue size of the IPO.

Therefore, the overall Mukka Proteins IPO will also comprise of the issue of 8,00,00,000 shares (800 lakh shares) which at the upper end of the price band of ₹28 per share aggregates to total issue size of ₹224 crore. The IPO of Mukka Proteins Ltd will be listed on the NSE and the BSE on the IPO mainboard. The IPO will entirely be a fresh issue and the fresh funds will be used to invest in its associates, Ento Proteins Private Ltd, to fund its working capital needs. Part of the funds will also be utilized for meeting the working capital needs of Mukka Proteins and for general corporate expenses. Promoters currently hold 100% in the company, which will get diluted post the IPO to 73.33%. The IPO will be lead managed by Fedex Securities Private Ltd, while Cameo Corporate Services Ltd will be the IPO registrar.

A brief on the anchor allocation of Mukka Proteins IPO

The anchor issue of Mukka Proteins IPO saw a relatively strong response on 20th February 2024 with 30% of the IPO size getting absorbed by the anchors. Out of 8,00,00,000 shares (800 lakh shares) on offer, the anchors picked up 2,39,99,565 shares (240 lakh shares) accounting for 30% of the total IPO size. The anchor placement reporting was made to the BSE late on Wednesday, 28th February 2024; one working day ahead of the IPO opening on Thursday, 29th February 2024.

The entire anchor allocation was made at the upper price band of ₹28 per share. This includes the face value of ₹1 per share plus a share premium of ₹27 per share, taking the anchor allocation price to ₹28 per share. Let us focus on the anchor allotment portion ahead of the Mukka Proteins Ltd IPO, which saw the anchor bidding opening and also closing on 28th February 2024. Post the anchor allocation, here is how the overall allocation looked.

Data Source: BSE

Here it must be noted that the 2,39,99,565 shares issued to the anchor investors on 28th February 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 50% before the anchor allocation to 20% 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 Mukka Proteins 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 Mukka Proteins IPO

On 28th February 2024, Mukka Proteins 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 2,39,99,565 shares were allotted to a total of 6 anchor investors. The allocation was done at the upper IPO price band of ₹28 per share (including premium of ₹27 per share) which resulted in an overall anchor allocation of ₹67.20 crore. The anchors have already absorbed 30% of the total issue size of ₹224 crore, which is indicative of fairly robust institutional demand.

Listed below are the 6 anchor investors who, have been allotted 14% or more of the anchor allocation done ahead of the IPO of Mukka Proteins Ltd. The entire anchor allocation of ₹67.20 crore was spread across a total of 6 major anchor investors and all the 6 anchor investors got more than 14% each out of the anchor allocation quota. While there were 6 anchor investors in all, all the 6 anchor investors who got allocated 14% or more each of the anchor quota are listed in the table below. These 6 anchor investors accounted for 100% of the total anchor collection of  ₹67.20 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)

The above list includes the full set of 6 anchor investors who got allotted shares of 14% or above each of the anchor portion done ahead of the Mukka Proteins Ltd IPO. In fact, there were only 6 anchor investor in all; with all the anchor investors getting more than 14% 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=20240228-35&attachedId=6e67a6d4-d5ab-4658-bc56-8094c980af1f

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 30% 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. Mukka Proteins 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 Mukka Proteins IPO and how to apply?

The issue opens for subscription on 29th February 2024 and closes for subscription on 04th Marcy 2024 (both days inclusive). The basis of allotment will be finalized on 05th March 2024 and the refunds will be initiated on 06th March 2024. In addition, the demat credits are expected to also happen on 06th March 2024 and the stock will list on 07th March 2024 on the NSE and the BSE. Mukka Proteins Ltd will test the appetite for such hospitality stocks in India. The credits to the demat account to the extent of shares allotted will happen by the close of 06th March 2024 under ISIN (INE0CG401037).