SAMHI Hotels IPO gets 45% Anchor Allocated

About the SAMHI Hotels IPO

The anchor issue of SAMHI Hotels IPO saw a relatively strong response on 13th September 2023 with 30% of the IPO size getting absorbed by the anchors. Out of the 10,87,38,095 shares (1,087.38 lakh shares approximately) on offer, the anchors picked up 4,89,32,143 shares (489.32 lakh shares approximately) accounting for 45% of the total IPO size. The anchor placement reporting was made to the BSE late on Tuesday, September 13th, 2023; a day ahead of the IPO opening. SAMHI Hotels IPO opens on 14th September 2023 in the price band of ₹119 to ₹126 and will close for subscription on 18th September 2023 (both days inclusive).

The entire anchor allocation was made at the upper price band of ₹126. This includes the face value of ₹1 per share plus a premium of ₹125 per share, taking the anchor allocation price to ₹126 per share. Let us focus on the anchor allotment portion ahead of the SAMHI Hotels Ltd IPO, which saw the anchor bidding opening and also closing on 13th 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 SAMHI Hotels IPO

On 13-Sep-2023, SAMHI Hotels IPO 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 4,89,32,143 shares were allotted to a total of 35 anchor investors. The allocation was done at the upper IPO price band of ₹126 (including premium of ₹125 per share) which resulted in an overall allocation of ₹616.55 crore. The anchors have already absorbed 45% of the total issue size of ₹1,370.10 crore, which is indicative of fairly robust institutional demand.

Listed below are the 9 anchor investors who got allotted shares as part of the overall anchor allocation quota for the SAMHI Hotels IPO to the extent of more than 3% of the overall anchor quota. The entire anchor allocation of ₹616.55 crore was spread across a total of 35 major anchor investors, of which the list below only covers 9 anchor investors with more than 3% of anchor quota allocated to them. These 9 anchor investors listed below accounted for 63.93% of the total anchor allocation of SAMHI Hotels Ltd and their participation will set the tone for retail participation in the IPO.

Data Source: BSE Filings

While the GMP has surged to a robust level of ₹35, it shows an attractive premium of 27.78% on listing. This has led to very strong anchor response with the anchors taking in 45% 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. SAMHI Hotels Ltd has witnessed anchor interest from domestic mutual funds, foreign portfolio investors, and even insurance companies.

SAMHI Hotels Ltd, in consultation with the book running lead managers (BRLMs) have allocated a total of 1,81,38,394 shares to domestic mutual funds, spread across 10 mutual fund schemes of 5 mutual fund AMCs. The mutual fund allocation alone is 37.07% of the total anchor book of SAMHI Hotels Ltd with an investment value of ₹228.54 crore.

Read about SAMHI Hotels IPO

Brief on the SAMHI Hotels Ltd business model

SAMHI Hotels Ltd, is a branded hotel ownership and hotel property management platform operating out of India. It has a total portfolio comprising of over 4,801 keys across a total of 31 operating properties. Most of them are located in the key urban consumption centres of India. Its hotels are spread across Bengaluru, Hyderabad, Delhi-NCR, Pune, Chennai, and Ahmedabad. It is also currently developing 2 hotels with a combined capacity of 461 keys in Navi Mumbai and in Kolkata. The recent acquisition of Asiya Capital and ACIC SPV has given SAMHI Hotels Ltd access to an additional 962 keys across 6 operating hotels. It has its keys under well recognized hotels operators like Courtyard Marriott, Sheraton, Hyatt, and Holiday Inn, among others. This provides SAMHI Hotels Ltd access to the loyalty programs of these hotel chains and their online reservation systems. SAMHI Hotels Ltd counts Equity International (led by Sam Zell), GTI Capital and International Finance Corporation (IFC) among its key shareholders.

The 4,801 keys held by SAMHI Hotels Ltd are spread across several premium properties across major destinations. These include 170 keys at the Courtyard by Marriott in Bengaluru, 270 keys at Fairfield by Marriott, Bengaluru across Whitefield and ORR properties, 153 keys in Fairfield by Marriott, Chennai, 148 keys at Fairfield by Marriott in Rajajinagar Bengaluru, 123 keys at Four Points by Sheraton, Vizag, 130 keys at Fairfield by Marriott, Goa, 109 keys at Fairfield by Marriott, Pune, 126 keys at Fairfield by Marriott, Coimbatore, 130 keys at Holiday Inn Express, Ahmedabad, 170 keys at Holiday Inn Express, Hyderabad and 161 keys by Holiday Inn Express, Bengaluru. In addition, SAMHI Hotels Ltd also has substantial number of keys across Holiday Inn properties in Chennai, Gurugram, Nashik and Pune.

The IPO will be lead managed by JM Financial and Kotak Mahindra Capital. KFIN Technologies (formerly Karvy Computershare is appointed the registrar to the IPO.