Demonstrating strong confidence in Tata Technologies, global engineering services giant, anchor investors injected Rs 791 crore into the company on November 21, a day ahead of its much-anticipated Initial Public Offering (IPO). Subscribing at the higher end of the price band, ranging between Rs 475 and Rs 500, the 67 anchor investors showcased their belief in the company’s potential.
Scheduled to open for subscription on November 22 and concluding on November 24, this IPO marks the first from the Tata Group in nearly two decades, following Tata Consultancy Services (TCS) in 2004.
In a filing to the exchanges, Tata Technologies revealed the allocation of 1,58,21,071 equity shares to anchor investors at Rs 500 per share after consultations with the book running lead managers. The list of global investors participating in the anchor book includes prestigious names like Goldman Sachs, Government Pension Fund Global, BNP Paribas Funds, Prudential Assurance Company, and HSBC Global.
On the domestic front, prominent mutual funds and insurance companies such as SBI Mutual Fund, ICICI Prudential Mutual Fund, Nippon Life, Aditya Birla Sun Life Trustee, and HDFC Life Insurance Company, among others, also invested in Tata Technologies.
Tata Technologies mentioned in its statement that out of the total anchor book shares, 13 domestic mutual funds applied for the public issue through a combined total of 39 schemes.
Anchor investors, often institutional players, are invited to subscribe to shares before an IPO to bolster investor confidence.
Tata Technologies, specializing in product development and digital solutions for global original equipment manufacturers and their tier-1 suppliers, aims to mobilize Rs 3,042.51 crore through the issuance of 6.08 crore equity shares at the upper price band.
The IPO, classified as an offer-for-sale (OFS) by promoter Tata Motors and investors Alpha TC Holdings & Tata Capital Growth Fund I, will see the entire issue proceeds (excluding IPO expenses) directed to the selling shareholders.
In a nod to its employees and Tata Motors shareholders, Tata Technologies has reserved 20.28 lakh equity shares and 60.85 lakh equity shares, respectively. The IPO, excluding these reserved portions, represents the net issue.
Qualified institutional buyers have been allocated half of the net offer size, high net worth individuals have a 15 percent share, and the remaining 35 percent is reserved for retail investors.
Market analysts, under the cloak of anonymity, disclosed that Tata Technologies IPO shares were commanding a significant 70 percent premium in the grey market over the upper price band. While the grey market is a speculative and non-regulated platform, investors often use the premium as an indicator of the expected listing price.
Akhil Bhardwaj, Senior Partner at Alpha Capital, cautioned investors to base their decisions on a thorough examination of the company’s financials, emphasizing the speculative nature of the grey market. As the IPO subscription period opens, investors are advised to scrutinize Tata Technologies’ financials before making investment decisions.