Uniparts India IPO Alert: Uniparts India Ltd IPO gets 30% anchor allocated

Uniparts India IPO anchor issue saw a healthy response on 29th November 2022 with 30% of the IPO size getting absorbed by the anchors. Out of the 1,44,81,942 shares on offer, the anchors picked up 43,44,582 shares accounting for 30% of the total IPO size. The anchor placement reporting was made to the BSE late on Tuesday. The IPO of Uniparts India Ltd opens on 30th November 2022 in the price band of Rs. 548 to Rs. 577 and will close for subscription on 02nd December 2022 (both days inclusive).

The basis of allotment of the IPO is likely to be finalized on 07th December 2022, while the refund issues will be initiated on 08th December 2022. The stock of Uniparts India Ltd will complete the demat credits on 09th December 2022 while the stock is slated to list on the BSE and the NSE on 12th December 2022. At the IPO, the QIB portion will be reduced to the extent of the anchor placement done on 29th November 2022. The entire anchor allocation was made at the upper price band of Rs. 577. Let us focus on the anchor allotment portion ahead of the Uniparts India 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 Uniparts India Ltd

On 29th November 2022, Uniparts India Ltd completed the bidding for its anchor allocation. There was stable response as the anchor investors participated through the process of book building. A total of 43,44,582 shares were allotted to a total of 21 anchor investors. The allocation was done at the upper IPO price band of Rs. 577 which resulted in an overall allocation of Rs. 250.68 crore. The anchors have already absorbed 30% of the total issue size of Rs. 835.61 crore, which is indicative of the robust institutional demand.

Listed below are the 15 anchor investors who got allotted shares over 3% of the anchor portion in the anchor issue. The entire anchor allocation of Rs. 250.68 crore was spread across 21 major financial institutions acting as anchor investors. List below are the 15 anchor investors who got allocated more than 3.00% each of the anchor portion. Out of the 21 anchors, these top 15 anchors accounted for 90.72% of the anchor allocation portion.

Data Source: BSE Filings

While the Uniparts India IPO GMP has tapered to around Rs. 80, it shows an attractive but relatively subdued premium of 13-14% 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. Uniparts India Ltd has got anchor flows from a mix of FPIs and also from domestic mutual funds.

Out of the total 43,44,582 shares allotted by way of anchor placement, Uniparts India Ltd 15,74,125 shares to domestic SEBI registered mutual funds. The allocation to mutual funds has been distributed across 9 mutual fund schemes belonging to 5 AMCs. Mutual Fund anchor allocation was 36.23% of the overall anchor allocation.