Popular Vehicles & Services IPO: Anchor Allocation at 29.94%

About Popular Vehicles & Services IPO

Popular Vehicles & Services IPO represents significant book-built issue valued at ₹ 601.55 crores. This offering is blend of fresh issue comprising 0.85 crore shares, amounting to ₹ 250.00 crores, & offer for sale consisting of 1.19 crore shares, totalling ₹ 351.55 crores.

Scheduled to open for subscription on March 12, 2024, & conclude on March 14, 2024, investors can anticipate allotment for Popular Vehicles & Services IPO to be finalized by Friday, March 15, 2024.  IPO is poised to list on both Bombay Stock Exchange (BSE) & National Stock Exchange (NSE), with tentative listing date earmarked for Tuesday, March 19, 2024.

Investors will have opportunity to participate in Popular Vehicles & Services IPO within price band set at ₹280 to ₹295 per share, with minimum lot size of 50 Shares. Retail investors are required to make minimum investment of ₹14,750.

For Non-Institutional Investors (NII), minimum lot size investment is 14 lots (700 shares), amounting to ₹206,500. For Qualified Institutional Buyers (QIB), it is 68 lots (3,400 shares), totalling ₹1,003,000.

Furthermore, IPO includes reservation of up to 37,453 shares for employees, offered at discounted rate of ₹ 28 per share.

 Book-running lead managers for Popular Vehicles & Services IPO are ICICI Securities Limited, Nuvama Wealth Management Limited, & Centrum Capital Limited. Link Intime Indi Private Ltd has been appointed as registrar for issue.

Overview of anchor allocation of Popular Vehicles & Services Ltd

On 12th March 2024. Post anchor allocation, here is how overall allocation looked.

(Source: BSE)

Allocation of shares under Popular Vehicles & Services IPO reflects diverse investor base & significant interest from different categories.

Reservation for Employees (0.18% of total IPO offer size): This allocation signifies company’s commitment to employee participation in its growth. While relatively small in percentage, it underscores company’s efforts to involve its workforce in its IPO.

Anchor Allocation (29.94% of total IPO offer size):  Substantial allocation for anchor investors indicates strong institutional confidence in Popular Vehicles & Services. This level of interest from institutional investors suggests positive outlook on company’s future performance.

QIB Shares Offered (19.96% of total IPO offer size):  Allocation for Qualified Institutional Buyers (QIBs) represents significant portion of IPO offer. QIBs are typically institutional investors with expertise in evaluating investment opportunities, indicating that institutional players are keenly interested in participating in IPO.

NII (HNI) Shares Offered (14.97% of total IPO offer size):  Allocation for Non-Institutional Investors (NIIs) or High Net Worth Individuals (HNIs) suggests that there is notable interest from individual investors with substantial financial capacity. This segment often includes wealthy individuals & corporate entities.

Retail Shares Offered (34.94% of total IPO offer size):  Substantial allocation for retail investors highlights broad market appeal & indicates that IPO is accessible to wide range of individual investors. This suggests that company aims to attract retail participation in its IPO, potentially driving demand.

Anchor Investors: Popular Vehicles & Services IPO's ability to raise ₹ 180.17 crore from anchor investors underscores strong institutional support & confidence in company's growth prospects. Anchor investors, typically institutional players, make significant investments ahead of IPO, signalling conviction in company's fundamentals.

Finer Points of Anchor Allocation Process

Before we go into details of actual anchor allotment, quick word on process of anchor placement.  anchor placement ahead of IPO/FPO is different from pre-IPO placement in that anchor allocation has lock-in period of just one month, although under new rules, part of anchor portion will be locked in for 3 months. It is just to give confidence to investors that issue is backed by large established institutions. It is presence of institutional investors like mutual funds & foreign portfolio investors (FPIs) that gives confidence to retail investors. Here are details of anchor lock-in for issue of Popular Vehicle Ltd.

 Popular Vehicles & Services IPO's anchor bidding took place on March 11, 2024, with total of 6,107,325 shares offered.  anchor portion size amounted to ₹180.17 crore, indicating significant institutional interest in IPO. Notably, there are lock-in periods for anchor investors' shares, with 50% of shares subject to 30-day lock-in period ending on April 14, 2024, & remaining 50% subject to 90-day lock-in period ending on June 13, 2024. These lock-in periods aim to promote stability & prevent short-term trading activities among anchor investors, showcasing their commitment to company’s long-term growth prospects.

However, anchor investors cannot be allotted shares at discount to IPO price. This is explicitly stated in SEBI revised regulations as under, “As per Securities & Exchange Board of Indi (Issue of Capital & Disclosure Requirement) Regulations, 2018, as amended, in case Offer Price discovered through book building process is higher than Anchor Investor Allocation Price, then Anchor investors will be required to pay difference by pay-in as specified in revised CAN.

Anchor allocation investors in Popular Vehicle & Services Ltd

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

Anchor investor portion of Popular Vehicles & Services IPO saw significant participation from various institutional entities, reflecting confidence in company’s prospects. HDFC Trustee Company Limited emerged as top anchor investor, with substantial allocations across its funds, including HDFC Tax Saver Fund & HDFC Capital Builder Value Fund. Other notable investors include Quant Mutual Fund, HSBC Global Investment Funds, & BOF Securities Europe SA.

These anchor investors collectively acquired 6,107,325 shares, constituting 29.94% of total IPO offer size, with total value allocated of ₹180.17 crore.  diverse range of investors underscores broad market interest in Popular Vehicles & Services IPO, indicating institutional investors' positive assessment of company’s potential for growth & value creation.

Analysis of anchor investor list reveals mix of mutual funds, global investment funds, insurance companies, & other financial institutions, reflecting well-diversified investor base. This diversified participation further enhances IPO’s stability & liquidity post-listing, as it mitigates concentration risk.

 Allocation percentages & values allotted to each anchor investor highlight their varying degrees of interest & investment strategies. Additionally, lock-in periods imposed on anchor investor shares, with 50% subject to 30-day lock-in & remaining 50% subject to 90-day lock-in, demonstrate their commitment to long-term investment objectives & confidence in company’s growth trajectory.

Overall, strong participation of anchor investors in Popular Vehicles & Services IPO signals positive market sentiment & augurs well for company’s listing & future performance on stock exchanges.