Protean eGov Tech IPO: Grab 29.27% Anchor Share

About the Protean eGov Technologies IPO

Protean eGov Technologies IPO opens for subscription on 06th November 2023 and closes for subscription on 08th November 2023. The stock of Protean eGov Technologies Ltd has a face value of ₹10 per share and the price band for the book building IPO has been set in the range of ₹752 to ₹792. The IPO of Protean eGov Technologies Ltd will be entirely an offer for sale (OFS) with no fresh issue component in the IPO. The offer for sale (OFS) portion of the IPO of Protean eGov Technologies Ltd comprises the sale of 61,91,000 shares (61.91 lakh shares), which at the upper price band of ₹792 per share will translate into an offer for sale (OFS) size of ₹490.33 crore. Protean eGov Technologies Ltd  is a professionally managed company with no promoter group. The OFS selling will be by the investor shareholders. Some of the key investor shareholders offering shares in the OFS include NSE Investments Ltd, SUUTI (UTI administrator), HDFC Bank, Axis Bank, Deutsche Bank, Union Bank of India and 360 One Special Opportunities Fund (part of the IIFL group).

Consequently, the overall IPO of Protean eGov Technologies Ltd will also mirror the OFS and will entail the sale of 61,91,000 shares (61.91 lakh shares), which at the upper price band of ₹792 per share will translate into total IPO issue size of ₹490.33 crore. The capital base of the company will remain the same after the IPO, being a mere transfer of ownership. Being entirely an offer for sale, there will be no fresh funds coming into the company from the IPO. The IPO will be ICICI Securities, Equirus Capital, IIFL Securities and Nomura Financial Advisory. Link Intime India Private Ltd will be the registrar to the issue.

A brief on the anchor allocation of Protean eGov Technologies IPO

The anchor issue of Protean eGov Technologies IPO saw a relatively strong response on 03rd November 2023 with 29.27% of the IPO size getting absorbed by the anchors. Out of the 61,91,000 shares (61.91 lakh shares) on offer, the anchors picked up 18,12,300 shares (18.12 lakh shares approximately) accounting for 29.27% of the total IPO size. The anchor placement reporting was made to the BSE late on Friday, November 03rd, 2023; one working day ahead of the IPO opening on Monday, 06th November 2023. The IPO of Protean eGov Technologies Ltd opens on 06th November 2023 in the price band of ₹752 to ₹792 and will close for subscription on 08th November 2023.

The entire anchor allocation was made at the upper price band of ₹792 per share. This includes the face value of ₹10 per share plus a premium of ₹782 per share, taking the anchor allocation price to ₹792 per share. Let us focus on the anchor allotment portion ahead of the Protean eGov Technologies Ltd IPO, which saw the anchor bidding opening and also closing on 03rd November 2023. Prior to the anchor allocation, here is how the overall allocation looked.

Here it must be noted that the 18,12,300 shares issued to the anchor investors on 03rd November 2023, will be reduced from the QIB quota above of 30.21 lakh shares and only the residual amount would be available to QIBs in the IPO. 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. Here are details of the anchor lock-in for the issue of Protean eGov Technologies Ltd.

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 allocation investors in Protean eGov Technologies IPO

On 03rd November 2023, Protean eGov Technologies 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 18,12,300 shares were allotted to a total of 18 anchor investors. The allocation was done at the upper IPO price band of ₹792 per share (including premium of ₹782 per share) which resulted in an overall anchor allocation of ₹135.43 crore. The anchors have already absorbed 29.27% of the total issue size of ₹490.33 crore, which is indicative of fairly robust institutional demand.

Listed below are the 18 anchor investors who, between them, cornered the entire 100% of the anchor allocation done ahead of the IPO of Protean eGov Technologies Ltd. The entire anchor allocation of ₹143.53 crore was spread across these 18 major anchor investors, with 4 anchor investors getting more than 14% allocation; another 2 anchor investors getting between 5% and 10% of the anchor allocation while the remaining 12 anchor investors got less than 5% of the anchor quota each. The detailed allocation is captured in the table below, indexed descending on the size of anchor allocation.

Data Source: BSE Filings (Value Allocated in ₹ in Crore)

The above list includes the full set of 18 anchor investors who got allotted shares in the anchor portion done ahead of the Protean eGov Technologies Ltd IPO. The detailed and comprehensive report on the anchor allocation with the mutual fund portion separated can be accessed by clicking on the link below.

https://www.bseindia.com/markets/MarketInfo/DownloadAttach.aspx?id=20231103-46&attachedId=93a97227-78f1-49f1-bdca-799504a10976

The detailed report is available in PDF format and can be downloaded by clicking on the link above. Alternatively, readers can also opt to cut this link and paste in their browser, in case the link is not directly clickable. The details of the anchor allocation can also be accessed in the Notices section of the BSE on its website www.bseindia.com.

Overall, the anchors absorbed 29.27% 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. Protean eGov Technologies Ltd saw a good deal of buying interest from all category of anchors viz. FPIs, domestic mutual funds, AIFs, and insurance companies. However, only two mutual fund houses participated in the anchor allocation.

The anchor response normally sets the tone for the retail participation in the IPO and the anchor response has been fairly steady this time around. Out of the 18,12,300 shares allocated to the anchors in the IPO, a total of 3,87,702 shares were allocated to domestic mutual funds registered with SEBI. This allocation was spread across 9 mutual fund schemes belonging to 2 asset management companies (AMCs). The mutual fund allocation in the anchor portion amounted to 21.39% of the total anchor size.