SEBI has introduced a new concept which is to be tried out for the first time during the issue of Adani Power. Typically the issue is divided into three categories of investors namely: – QIB’s (Qualified Institutional Investors) Non Retail or HNI’s and the retail category. A minimum of 30% of the issue is offered to retail, 10% to HNI’s and 60% to QIB’s with a reservation of 5% to mutual funds. This is in case where the offer is for less than 25% of the post issue capital.
In cases where the anchor investor comes in there is a reservation of 30% of the QIB portion for such persons. They are allowed to apply in the QIB category as well. The salient features of the scheme are that for such investors the issue opens one day before the issue opens for other people and closes on that first day itself. In case of Adani Power the issue for anchor investor opens and closes on 27th July 2009. The primary difference in such investors is that they have a lock-in on their investment of thirty days. Normally all investors are allowed to sell on the first day of listing and there is no such lock in. This is a new experiment being tried out for the first time and some marquee investors are expected to put in bids on Monday in this issue.
Given below is the excerpt from the RHP of Adani Power on Anchor Investor.
Anchor Investor Portion as mentioned in RHP of Adani Power
The Company may consider participation by Anchor Investor in the Net Issue for up to 52,857,366 Equity Shares in accordance with the applicable SEBI Guidelines. The Anchor Investor Bid/Issue Period shall be one day prior to the Bid/Issue Opening Date. The QIB Portion shall be reduced in proportion to the allocation under the Anchor Investor category. In accordance with the SEBI Guidelines, the key terms for participation in the Anchor Investor Portion are as follows:
(a) Anchor Investors shall be QIBs as defined in the SEBI Guidelines.
(b) The Bid must be for a minimum of such number of Equity Shares so that the Bid Amount exceeds Rs. 100 million and in multiples of [·] Equity Shares thereafter. A Bid cannot be submitted for more than 30% of the QIB Portion.
(c) One-third of the Anchor Investor Portion shall be reserved for allocation to domestic mutual funds.
(d) The Bidding for Anchor Investors shall open one day before the Bid/Issue Opening Date and shall be completed on the same day.
(e) The Company, in consultation with the GCBRLM, shall finalise Allocation to the Anchor Investors on a discretionary basis, subject to compliance with requirements regarding minimum number of allotees.
(f) The number of Equity Shares allocated to Anchor Investors and the price at which the allocation is made, shall be made available in public domain by the BRLMs before the Bid/Issue Opening Date.
(g) Anchor Investors shall pay Anchor Investor Margin Amount representing 25% on the Bid Amount at the time of submission of the Bid. Any difference between the amount payable by the Anchor Investor for Equity Shares Allocated and the Anchor Investor Margin Amount paid at the time of Bidding, shall be payable by the Anchor Investor within two days of the Bid/ Issue Closing Date.
(h) In case the Issue Price is greater than the price at which Equity Shares are allocated to Anchor Investors, the additional amount being the difference between the Issue Price and the price at which Equity Shares were allocated to the Anchor Investors shall be paid by the Anchor Investors. In the event the Issue Price is lower than the price at which Equity Shares are allocated to Anchor Investors, the allotment to Anchor Investors shall be at the higher price i.e. the price at which Equity Shares were allocated under the Anchor Investor Portion.
(i) The Equity Shares allotted in the Anchor Investor Portion shall be locked-in for a period of 30 days from the date of allotment in the Issue.
(j) The BRLMs or any person related to the BRLMs / Promoters/Promoter Group shall not participate in the Anchor Investor Portion.
(k) Bids made by QIBs under both the Anchor Investor Portion and the QIB Portion shall not be considered as multiple Bids.
(l) The payment instruments for payment into the Escrow Account should be drawn in favour of:
• In case of Resident Anchor Investors: “APL – Escrow Account – Anchor Investor”
• In case of Non-Resident Anchor Investor: “APL – Escrow Account – Anchor Investor – NR”
The Red Herring Prospectus, in so far as it relates to terms of the Issue should be read in conjunction with theafore stated paragraphs, to the extent applicable.
There is one area of confusion about the day that lock in begins. RHP says the date of allotment. The intention of SEBI is very clear that there should be a lock in of thirty days between Anchor investor and other investors. We would probably know the exact conditions a little later on.
