Sovereign funds raise anchor investments

Sovereign and private equity funds have not only found exit opportunities in this year’s initial public offering (IPO) boom but have increased their investment through the anchor route. 

These funds have invested Rs 1,247 crore or a tenth of the anchor investor money in this year’s IPOs so far, up from seven per cent last year, says private equity (PE) consultancy Venture Intelligence.

A total of Rs 12,275 crore has been raised through the anchor investor route in 27 IPOs this year till now; issue size was Rs 41,791 crore. The rest of the anchor investment, nearly Rs 11,000 crore, came from domestic institutional investors, including insurance companies and mutual funds.

“Though IPOs have been highly priced this year, sovereign funds have taken a macro call for investing in India, versus other markets,” says Arun Natarjan, founder, Venture Intelligence. “For these long-term investors, current (higher) prices are not such a big concern.” 

HDFC Standard Life Insurance had a Rs 8,695 crore IPO this month; it raised Rs 2,322 crore from anchor investors. Of this, Rs 282 crore was raised from funds, including Abu Dhabi Investment Authority (ADIA). The latter has invested Rs 416 crore through the anchor investor route across various IPOs this year, up from Rs 108 crore last year.  

SBI Life Insurance had a Rs 8,400 crore IPO in September; Rs 2,226 crore was raised through anchor investors. Of this, Rs 423 core was from funds, including the Singapore government’s GIC and ADIA. GIC was the second largest investor among these funds this year, with investment of Rs 299 crore, up from Rs 293 crore last year. 

Baring PE Partners India was among those in its segment which also found this route attractive. It invested through this in the IPO of Matrimony.com. PE funds prefer investing in private companies and look for exit opportunities when these are listed. They also participate in the secondary markets through PIPE (private investments in public enterprises) deals, when they see such opportunities. But, PE investing in an IPO is not usual.  

“Though most of the IPOs have been highly priced this year, we found this opportunity attractive,” said Rahul Bhasin, managing partner at Baring. “You can still consider it an exception than a rule.”