Anchor Investors - Misleading the Retail/HNI Investors in IPO Market?

Published on Saturday, May 16, 2015 by Chittorgarh.com Team | Modified on Friday, November 1, 2019

Anchor investors are qualified institutional buyer investing over Rs 10 Crore in an IPO. The idea of Anchor Investors was introduce by SEBI to boost confidence in IPO for retail and HNI investors.

Although in the past, many Anchor Investors participated in IPOs at the fancy price band and burnt their fingers as more than 60% IPOs fared poorly post listing due to greedy pricing, they did not learn any lesson thereof. Now since December 2014, they once again repeated the mistake and warranted anger among their investor/supporters.

Let us take the review of recent IPOs wherein Anchor Investors participated in a big way and received allotment at the higher price band announced as per original proposals and did not got any relief even when the IPO price bands revised downward as they were not allowed for withdrawal or modify their bids. Further, they had to hold on to their investment for stipulated time by which there has been further erosion in market prices of the said IPOs. Details can be seen from the following table:

List of Anchor Investors participation in IPO

IPO	Original Price Band (Rs)	Revised Price Band (Rs)	Anchor Investors Bids at (Rs)	Amount Invested (Cr Rs)	Final allotment at (Rs)	Listing Price BSE/NSE (Rs)	Listing Close BSE/NSE (Rs)	CMP 15 May 2015 (Rs)
Monte Carlo	631-645	NA	645	105	645	585/584	566/567	572
Ortel Communications	181-200	NA	181	46	181	181/160	172/162	170
Adlabs Entertainment	221-230	180-215	221	60	180	168/162	191/192	158
MEP Infratech	63-65	NA	65	72	63	63/65	61/58	59
UFO Moviez	615-625	NA	625	180	625	600/600	599/597	610

Bunch of Anchor Investors supported IPO of Monte Carlo included Aditya Birla Private Equity Trust, DB International (Asia) and Birla Sunlife Trustee Company Pvt Ltd, where as for Ortel Communications list of Anchor Investors included Axis Mutual Fund and ICICI Prudential Life Insurance. Anchor Investors that applied in Adlabs Entertainment had Daiwa India, HDFC Infrastructure Fund, Axis Mutual Fund, L&T Mutual Fund and IL&FS in the list. MEP Infratech got bids from Anchor Investors like HDFC Mutual Fund, Tata Offshore India Opportunities Scheme, Prime India Opportunity and EM Resurgent Fund. In UFO Moviez the list of Anchor Investors consisted of Pinebridge Global Funds, Reliance AMC, Amundi Funds, SBI AMC, Jupiter South Asia, and Kotak AMC among others.

On HNI and Retail category front, all these IPOs fared poorly with below expected response mainly due to greedy pricing.

As all the above IPOs fared poorly post listings, these Anchor Investors have now started facing music from their irk investors on their such investment decisions. They are now in dilemma with uproar from their supporters as well as from their counterparts. According to market sources, few top-level officers of ICICI Prudential have been asked to leave on reports of under the table deals in one of the investments recently made by them. According to market sources, MEP Infra, PNC Infra issues scrapped through with planned deals.

This has now raised eyebrows among regulators as well. No fund managers would have dared to invest like this unless some under the table deals would have been planned. Thus, on one hand, we find greedy pricing of IPO continuing unabatedly and on the other, such repeated deals are happening even now that is sure to play a spoil sport for primary market.

Let us hope that not only the Merchant Bankers and Promoters put aside their greedy pricing practice for IPOs, but also the Anchor Investors have to bear in mind the interest of its supporters for not taking such hasty decisions at fancy price and not entertain any under the table deals.