RBZ Jewellers IPO anchor allocation set at 21%

About the RBZ Jewellers IPO

RBZ Jewellers IPO will be open from December 19, 2023 to December 21, 2023. The stock of RBZ Jewellers Ltd has a face value of ₹10 per share and the price band for the book building IPO has been set in the band of ₹95 to ₹100 per share. The final price will be discovered within this band. The IPO of RBZ Jewellers Ltd will be entirely a fresh issue of shares with no offer for sale (OFS) component. Incidentally, a fresh issue tends to bring in fresh funds into the company, but is also EPS and equity dilutive. The fresh issue portion of the IPO of RBZ Jewellers Ltd comprises the issue of 1,00,00,000 shares (100 lakh shares), which at the upper price band of ₹100 per share will translate into a fresh issue size of ₹100.00 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. Therefore, the overall IPO of RBZ Jewellers Ltd will also comprise of the issue of 1,00,00,000 shares (100 lakh shares), which at the upper price band of ₹100 per share translates into total IPO size of ₹100.00 crore. The IPO of RBZ Jewellers Ltd will be listed on the NSE and the BSE on the IPO mainboard. The major customers of RBZ Jewellers Ltd include marquee names in the organized jewellery retail business like Titan, Malabar Gold, Joyalukkas India Limited, Senco Gold Limited, Hazoorilal Jewellers, and others. The IPO is entirely a fresh issue and the proceeds will be used by RBZ Jewellers to fund its working capital funding needs and for general corporate purposes. The IPO will be lead managed by Arihant Capital Markets Ltd. Bigshare Services Private Ltd will be the registrar to the issue.

A brief on the anchor allocation of RBZ Jewellers IPO

The anchor issue of RBZ Jewellers Ltd saw a relatively modest response on 18th December 2023 with 21% of the IPO size getting absorbed by the anchors. Out of 1,00,00,000 shares (100 lakh shares) on offer, the anchors picked up 21,00,00 shares (21 lakh shares) accounting for 21% of the total IPO size. The anchor placement reporting was made to the BSE late on Monday, December 18th, 2023; one working day ahead of the IPO opening on Tuesday, 19th December 2023. The IPO of RBZ Jewellers Ltd opens on 19th December 2023 in the price band of ₹95 to ₹100 and will close for subscription on 21st December 2023.

The entire anchor allocation was made at the upper price band of ₹100 per share. This includes the face value of ₹10 per share plus a premium of ₹90 per share, taking the anchor allocation price to ₹100 per share. Let us focus on the anchor allotment portion ahead of the RBZ Jewellers Ltd IPO, which saw the anchor bidding opening and also closing on 18th December 2023. Post the anchor allocation, here is how the overall allocation looked.

Here it must be noted that the 21,00,000 shares issued to the anchor investors on 18th 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 RBZ 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 RBZ Jewellers Ltd

On 18th December 2023, RBZ Jewellers Ltd completed the bidding for its anchor allocation. There was a modest response as the anchor investors participated through the process of book building. A total of 21,00,000 shares were allotted to a total of 3 anchor investors. The allocation was done at the upper IPO price band of ₹100 per share (including premium of ₹90 per share) which resulted in an overall anchor allocation of ₹21.00 crore. The anchors have already absorbed 21% of the total issue size of ₹100 crore, which is indicative of fairly modest institutional demand.

Listed below are the 3 anchor investors who, have been allotted the entire 100% of the anchor allocation of RBZ Jewellers Ltd between them. The entire anchor allocation of ₹21.00 crore was spread across these 3 key anchor investors only. These 3 anchor investors accounted for 100% of the total anchor collection of  ₹21.00 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 set of 3 anchor investors who got allotted shares of 100% of the anchor quota of RBZ Jewellers Ltd IPO between them. The detailed and comprehensive report on the anchor allocation can be accessed by clicking on the link below.

https://www.bseindia.com/markets/MarketInfo/DownloadAttach.aspx?id=20231218-18&attachedId=01ac1f84-a6eb-429d-9bd9-a6327e0d88dc

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 21% 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. RBZ Jewellers Ltd saw most of the buying interest coming from the AIFs or the Alternate Investment Funds.

Let us finally look at the sub-category of mutual fund participation in the anchor allocation ahead of the RBZ Jewellers Ltd IPO. The anchor response normally sets the tone for the retail participation in the IPO and the anchor response has been fairly steady this time around. There was no allocation to any of the mutual funds registered with SEBI in the anchor quota of RBZ Jewellers Ltd.