Manoj Vaibhav Gems ‘N’ Jewellers IPO gets 30% anchor allocated

About the Manoj Vaibhav Gems ‘N’ Jewellers IPO

The anchor issue of Manoj Vaibhav Gems ‘N’ Jewellers Ltd saw a relatively strong response on 21st September 2023 with 30% of the IPO size getting absorbed by the anchors. Out of the 1,25,67,442 shares (125.67 lakh shares approximately) on offer, the anchors picked up 37,70,160 shares (37.70 lakh shares approximately) accounting for 30% of the total IPO size. The anchor placement reporting was made to the BSE late on Thursday, September 21st, 2023; one working day ahead of the IPO opening. The IPO of Manoj Vaibhav Gems ‘N’ Jewellers Ltd opens on 22nd September 2023 in the price band of ₹204 to ₹215 and will close for subscription on 26th September 2023 (both days inclusive).

The entire anchor allocation was made at the upper price band of ₹215. This includes the face value of ₹10 per share plus a premium of ₹205 per share, taking the anchor allocation price to ₹215 per share. Let us focus on the anchor allotment portion ahead of the Manoj Vaibhav Gems ‘N’ Jewellers Ltd IPO, which saw the anchor bidding opening and also closing on 21st September 2023. Before that, here is how the overall allocation will look.

The overall allocation to QIBs includes the anchor portion, so the anchor shares allotted will be deducted from the QIB quota for the purpose of the public issue.

Finer points of anchor allocation process

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 Manoj Vaibhav Gems ‘N’ Jewellers Ltd

On 21st September 2023, Manoj Vaibhav Gems ‘N’ Jewellers Ltd completed the bidding for its anchor allocation. There was a strong and robust response as the anchor investors participated through the process of book building. A total of 37,70,160 shares were allotted to a total of 8 anchor investors. The allocation was done at the upper IPO price band of ₹215 (including premium of ₹205 per share) which resulted in an overall allocation of ₹81.06 crore. The anchors have already absorbed 30% of the total issue size of ₹270.20 crore, which is indicative of fairly robust institutional demand.

Listed below are the 8 anchor investors who got allotted the entire 100% shares as part of the anchor allocation quota for the IPO of Manoj Vaibhav Gems ‘N’ Jewellers Ltd. The entire anchor allocation of ₹81.06 crore was spread across these 8 major anchor investors and between them, they accounted for the entire 100% of the anchor allocation. The anchor allocation of Manoj Vaibhav Gems ‘N’ Jewellers Ltd and their participation will set the tone for retail participation in the IPO.

Data Source: BSE Filings

The stock has not been too active in the grey market and hence there is no credible GMP available for the stock. Despite that, there was strong response to the anchor allocation with the anchors taking up 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. Manoj Vaibhav Gems ‘N’ Jewellers Ltd has witnessed anchor interest from foreign portfolio investors and other AIFs, while domestic mutual funds have not participated in the IPO at all. Hence there is no reported allocation to any registered mutual fund in India.

Brief on the Manoj Vaibhav Gems ‘N’ Jewellers Ltd business model

Manoj Vaibhav Gems 'N' Jewellers Ltd was incorporated in the year 2003. It is a very strong and well-entrenched jewellery brand in South India and also goes under the brand of Vaibhav Jewellers. Manoj Vaibhav Gems 'N' Jewellers Ltd offers gold, silver, and diamond jewellery in different traditional and modern designs for its customers. In addition, it also sells precious gemstones, and other jewellery products through retail showrooms offline as well as through its website online. Manoj Vaibhav Gems 'N' Jewellers Ltd predominantly caters across economic segments to the micro markets of Andhra Pradesh and Telangana; two states with a substantial penchant for gold and jewellery purchase. Manoj Vaibhav Gems 'N' Jewellers Ltd broadly caters to the rural and to the urban market. The company currently has 13 showrooms (inclusive of 2 franchisee showrooms) across 8 towns and 2 cities in the states of Andhra Pradesh and Telangana.

Manoj Vaibhav Gems 'N' Jewellers Ltd  offers 5 classes of jewellery for its customers. The Daily-wear Jewellery is plain gold with no stone studding and is preferred for daily use. These include plain gold bangles, simple earrings, plain gold band rings etc. The second is Bridal Jewellery which offers a wide choice of jewellery for women and women for the big occasion. These are more elaborate in detail. Thirdly, the Occasion Weal Jewellery is an extension of bridal jewellery and can be segregated for functions like Mehandi, Sangeet, Roka, etc. Fourthly, there is antique jewellery with fairly elaborate and ethnic workmanship and is used for the relic look. This is more for festivals, house warming etc. Lastly, there is the unique classification of Temple Jewellery, which is again classic workmanship based. Here each piece is curated and handmade. This goes well with tradition festive wear. In short, the company has an offering for every possible Indian occasion.

The fresh funds will be used to fund the capex for the 8 new stores that it proposes to open as well as the inventory for these stores. Part of the funds raised will also be applied towards general corporate purposes. The issue will be lead managed by Bajaj Capital and Elara Capital. Bigshare Services Private Ltd will be the registrar to the issue.