HMA Agro Industries IPO gets 30% anchor allocated

The anchor issue of HMA Agro Industries IPO saw a robust response on 17th June 2023 with 30% of the IPO size getting absorbed by the anchors. Out of the 82,05,028 shares on offer, the anchors picked up 24,61,537 shares accounting for 30% of the total IPO size. The anchor placement reporting was made to the BSE late on Monday, 19 June 2023. The IPO of HMA Agro Industries Ltd opens on 20th June 2023 in the price band of ₹555 to ₹585 and will close for subscription on 23rd June 2023 (both days inclusive). The entire anchor allocation was made at the upper price band of ₹585. Let us focus on the anchor allotment portion ahead of the HMA Agro Industries Ltd IPO.

The table below captures the allocation of the IPO to various categories of investors viz. QIBs, HNI / NIIs and Retail Investors. The anchor allocation made on Monday 19 June 2023 will be reduced from the QIB portion allocation. Only the balance number of shares will be issued now as part of the IPO to the QIBs.

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 HMA Agro Industries Ltd

On 19th June 2023, HMA Agro Industries 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 24,61,537 shares were allotted to a total of 7 anchor investors. The allocation was done at the upper IPO price band of ₹585 which resulted in an overall allocation of ₹144 crore. The anchors have already absorbed 30% of the total issue size of ₹480 crore, which is indicative of the robust institutional demand.

Listed below are the 7 anchor investors who got allotted the total anchor portion shares on an individual basis. The entire anchor allocation of ₹144 crore was spread across these 7 major anchor investors. These seven anchor investors as stated in the table below accounted for the total anchor allocation of HMA Agro Industries IPO.

Data Source: BSE Filings

While the GMP has remained stable for the last few days around the levels of ₹28, it shows a relatively subdued premium of 4.79% on listing. Despite the tepid show in the GMP market, the company saw reasonably strong 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. HMA Agro Industries Ltd has largely got its funds from the foreign investors and other funds while the domestic mutual funds have not been active in the anchor portion. It remains to be seen if they actively participate in the actual IPO.

Details of HMA Agro Industries IPO

HMA Agro Industries Ltd was incorporated in the year 2008 as a star export house to deal in food trade. It is a food trade company that basically handles a variety of agricultural product exports including the predominant exports of frozen fresh de-glanded buffalo meat. In addition,  HMA Agro Industries Ltd is also into the export of frozen natural products, vegetables, and cereals. Incidentally, HMA Agro Industries Ltd happens to be one of the largest exporters of frozen buffalo meat products from India and the one company alone accounts for more than 10% of India's total export of frozen buffalo meat. Its products are packaged under the brand name "Black Gold", "Kamil" & "HMA". The company’s products have a vast export market that is spread across more than 40 countries across the world.

For retail and other investors, the minimum lot size is 25 shares and the minimum lot size requirement across different categories of investors is as under.

The issue is slated to list on the bourses on July 04, 2023.