Sula Vineyards Ltd IPO gets 30% anchor allocated

The anchor issue of Sula Vineyards IPO saw a robust response on 09th December 2022 with 30% of the IPO size getting absorbed by the anchors. Out of the 2,69,00,530 shares on offer, the anchors picked up 80,70,158 shares accounting for 30% of the total IPO size. The anchor placement reporting was made to the BSE late on Friday. The IPO of Sula Vineyards Ltd opens on 12th December 2022 in the price band of Rs.340 to Rs.357 and will close for subscription on 14th December 2022 (both days inclusive). The entire anchor allocation was made at the upper price band of Rs357. Let us focus on the anchor allotment portion ahead of the Sula Vineyards 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 Sula Vineyards Ltd

On 09th December 2022, Sula Vineyards 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 80,70,158 shares were allotted to a total of 22 anchor investors. The allocation was done at the upper IPO price band of Rs.357 which resulted in an overall allocation of Rs.288.10 crore. The anchors have already absorbed 30% of the total issue size of Rs960.35 crore, which is indicative of the robust institutional demand.

Listed below are the 13 anchor investors who got allotted at least 3% of the total anchor allocation individually. The entire anchor allocation of Rs.288.10 crore was spread across these 22 major anchor investors. These top 13 anchor investors listed below accounted for 83.68% of the total anchor allocation of Sula Vineyards Ltd.

Data Source: BSE Filings

While the GMP has remained stable after falling to Rs34, it shows an attractive but relatively subdued premium of 9-10% on listing. This has led to reasonable anchor response with the anchors taking in 30% 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. Sula Vineyards 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 has 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 Sula Vineyards Ltd. Aditya Birla AMC, HDFC MF and SBI MF were the three AMCs to participate in the anchor allotment of Sula Vineyards Ltd.

Out of the total 80,70,158 shares allotted by way of anchor placement, Sula Vineyards Ltd allotted a total of 25,21,134 shares to 5 domestic mutual fund schemes across 3 AMCs. The mutual fund allocation represents 31.24% of the overall anchor allocation.