TVS Supply Chain Solutions IPO gets 45% anchor allocated

The anchor issue of TVS Supply Chain Solutions Ltd saw a robust response on 09th August 2023 with 45% of the IPO size getting absorbed by the anchors as part of the anchor book, one day prior to the IPO opening. Out of the 4,46,70,051 shares on offer, the anchors picked up 2,01,01,522 shares accounting for a healthy 45% of the total IPO size. The anchor placement reporting was made to the BSE late on Wednesday, 09th August 2023. The IPO of TVS Supply Chain Solutions Ltd opens on 10th August 2023 in the price band of ₹187 to ₹197 per share and will close for subscription on 14th August 2023 (both days inclusive). The entire anchor allocation was made at the upper price band of ₹197 per share. Let us focus on the anchor allotment portion ahead of the TVS Supply Chain Solutions Ltd IPO.

Update on TVS Supply Chain Solutions IPO Anchor Investors

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 TVS Supply Chain Solutions Ltd

On 09th August 2023, TVS Supply Chain Solutions 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 2,01,01,522 shares were allotted to a total of 18 anchor investors. The allocation was done at the upper IPO price band of ₹197 per share which resulted in an overall allocation of ₹396 crore. The anchors have already absorbed 45% of the total issue size of ₹880 crore, which is indicative of the robust institutional demand for the IPO, even ahead of its opening.

Listed below are the 12 anchor investors who got allotted at least 3% of the total anchor allocation individually. The entire anchor allocation of ₹396 crore was spread across these 18 major anchor investors. These top 12 anchor investors listed below accounted for 90.34% of the total anchor allocation of TVS Supply Chain Solutions Ltd.

Data Source: BSE Filings

While the GMP has edged lower to ₹15, it shows a rather subdued premium of 7-8% on listing. This is despite the very strong anchor response with the anchors taking in 45% 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. TVS Supply Chain Solutions 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 TVS Supply Chain Solutions Ltd. Franklin Templeton MF, Tata MF and Sundaram Mutual Fund are some of the prominent AMCs to participate in the anchor allotment of TVS Supply Chain Solutions Ltd.

Out of the total 2,01,01,522 shares allotted by way of anchor placement, TVS Supply Chain Solutions Ltd allotted a total of 76,26,828 shares to 8 domestic mutual fund schemes across 3 AMCs. The mutual fund allocation represents 37.94% of the overall anchor allocation.

Brief on TVS Supply Chain Solutions Ltd and the IPO

TVS Supply Chain Solutions (TVS SCS), is part of TVS Mobility Group (part of the reputed TVS group of South India). It is among the largest and fastest growing integrated supply chain solutions provider in India and has been handling complex projects for a long time. Over the years, it brought in-depth understanding of multi-sector dynamics and local markets, operational experience, corporate governance standards, and the implicit trust of millions of stakeholders. The company has skilfully managed very complex value chains across sectors for more than 15 years. TVS Supply Chain Solutions Ltd has over 100 years of experience addressing supply chain challenges for global businesses; apart from government departments, and MSMEs through a fully integrated offerings.

Here are the details of the IPO of TVS Supply Chain Solutions Ltd. The offer for sale of the company IPO will entail the issue of 1,42,13,198 shares which at the upper end of the price band of ₹197 would result in an offer for sale component of ₹280 crore. The fresh issue component of the company IPO will entail the issue of 3,04,56,853 shares which at the upper end of the price band of ₹197 would result in a fresh issue component of ₹600 crore. Therefore, the overall size of the company IPO will entail the issue of 4,46,70,051 shares which at the upper end of the price band of ₹197 would result in the total issue size of ₹880 crore.