Yatharth Hospital IPO gets 30% Anchor Allocated

The anchor issue of Yatharth Hospital & Trauma Care Services Ltd saw a robust response on 25th July 2023 with nearly 30% of the IPO size getting absorbed by the anchors. Out of the 2,28,85,023 shares on offer, the anchors picked up 68,65,506 shares accounting for 30% of the total IPO size. The anchor placement reporting was made to the BSE late on Tuesday. The IPO of Yatharth Hospital & Trauma Care Services Ltd opens on 26th July 2023 in the price band of ₹285 to ₹300 and will close for subscription on 28th July 2023 (both days inclusive). The entire anchor allocation was made at the upper price band of ₹300 (face value of ₹10 plus premium of ₹290 per share). Let us focus on the anchor allotment portion ahead of the Yatharth Hospital & Trauma Care Services 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 Yatharth Hospital & Trauma Care Services Ltd

On 26th July 2023, Yatharth Hospital & Trauma Care Services 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 68,65,506 shares were allotted to a total of 18 anchor investors. The allocation was done at the upper IPO price band of ₹300 which resulted in an overall allocation of ₹205.97 crore. The anchors have already absorbed 30% of the total issue size of ₹686.55 crore, which is indicative of the robust institutional demand.

Listed below are the 14 anchor investors who got allotted at least 4% of the total anchor allocation individually. The entire anchor allocation of ₹205.97 crore was spread across these 18 major anchor investors. These top 14 anchor investors listed below accounted for 95.15% of the total anchor allocation of Yatharth Hospital & Trauma Care Services IPO.

Data Source: BSE Filings

While the GMP has remained stable at around ₹70, it shows an attractive grey market premium of 23-24% 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. Yatharth Hospital & Trauma Care Services Ltd has been a mix, getting fair response from FPIs but it has got extremely strong response from the domestic mutual funds and the domestic insurance companies, considering its product positioning in the Indian market. Its FPI flows are more from the overseas derivative instruments (ODI), which represents the fund coming through the P-Note route. The number and spread of the Foreign Portfolio Investors have been fairly limited 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 Yatharth Hospital & Trauma Care Services Ltd. ICICI Prudential AMC, Aditya Birla AMC, HDFC MF, Nippon Life India MF and Bandhan MF were the major AMCs to participate in the anchor allotment of Yatharth Hospital & Trauma Care Services Ltd.

Out of the total 68,65,506 shares allotted by way of anchor placement, Yatharth Hospital & Trauma Care Services Ltd allotted a total of 24,44,000 shares to 5 domestic mutual fund schemes across 5 AMCs. The mutual fund allocation represents 35.60% of the overall anchor allocation.

Brief on the business model of Yatharth Hospital & Trauma Care Services Ltd

Yatharth Hospital & Trauma Care Services Ltd was incorporated in 2008 as a multi-care hospital chain. It is ranked among the top 10 largest private sector hospital in the Delhi / NCR region. Yatharth Hospital & Trauma Care Services Ltd operates 3 super specialty hospitals situated at Noida, Greater Noida, and Noida Extension. The major facility at Noida Extension Hospital has a capacity of 450 beds and offers high-end medical and operative care. Yatharth Hospital & Trauma Care Services Ltd also recently acquired a 305-bedded multi-specialty hospital in Madhya Pradesh.

Yatharth Hospital & Trauma Care Services Ltd has a team of over 370 doctors across various disciplines. Some of the super specialty centres of excellence include Centre of Medicine, Centre of General Surgery, Centre of Gastroenterology, Centre of Cardiology and Centre of Nephrology & Urology. In addition, the Yatharth Hospital & Trauma Care Services Ltd specializes in Pulmonology, Neurosciences, Paediatrics, Gynaecology, Orthopaedics and Rheumatology. Healthcare has been one of the major focus areas for institutional and private equity investors too in the last few years and that could be a value driver.

The issue is being jointly lead managed by IIFL Securities, Ambit Private Ltd and Intensive Fiscal Services Private Ltd. Link Intime India Private Ltd will be the registrars to the issue. The company will use the fresh funds portion to repay borrowings of the parent and the loans of its subsidiaries. It will also fund capex of parent & subsidiaries and fund inorganic growth.