Meesho faces investor protest over anchor allotment to SBI Funds
The Indian e-commerce industry has been abuzz with the news of Meesho’s impending initial public offering (IPO). However, the company has faced a significant setback in its anchor book allocation process. According to reports, Meesho’s anchor book faced investor withdrawals after a significant allocation to SBI Funds Management, prompting other large funds to exit in protest. This move has raised eyebrows among investors and industry experts, who are questioning the company’s allocation strategy.
The anchor book is a crucial component of the IPO process, where a portion of the shares are allocated to institutional investors before the IPO opens for public subscription. The anchor investors are typically large institutional investors, such as mutual funds, pension funds, and sovereign wealth funds, who are expected to hold the shares for a longer period. The anchor book allocation is usually done to ensure that the IPO is well-subscribed and to provide a price discovery mechanism for the shares.
In Meesho’s case, the company had allocated a significant portion of its anchor book to SBI Funds Management, which is one of the largest mutual fund houses in India. However, this move did not go down well with other large funds, who felt that the allocation was biased towards SBI Funds Management. As a result, several large funds, including Capital Group, Aberdeen Group, ICICI Prudential Asset Management, and Nippon India Life Asset Management, withdrew their investments from the anchor book.
The withdrawal of these large funds has raised concerns about the IPO’s success, as the anchor book is a critical component of the IPO process. However, Meesho’s IPO lineup still includes several global investors, such as GIC and BlackRock, which is a positive sign for the company. The inclusion of these global investors suggests that Meesho’s business model and growth prospects are still attractive to international investors.
The controversy surrounding Meesho’s anchor book allocation has sparked a debate about the allocation process in IPOs. Some experts argue that the allocation process should be more transparent and fair, to ensure that all investors have an equal opportunity to participate in the IPO. Others argue that the allocation process is a commercial decision, and companies should be free to allocate their shares as they see fit.
Meesho’s IPO is one of the most highly anticipated IPOs in the Indian e-commerce industry, with the company looking to raise significant funds to expand its business. The company has been growing rapidly in recent years, with its revenue increasing by over 100% in the last fiscal year. Meesho’s business model is focused on social commerce, where it connects sellers with buyers through social media platforms.
The company’s growth prospects are attractive, and its IPO is expected to be well-subscribed. However, the controversy surrounding the anchor book allocation has raised concerns about the company’s corporate governance and allocation strategy. Meesho will need to address these concerns and provide more transparency about its allocation process to regain investor confidence.
In conclusion, Meesho’s IPO has faced a significant setback due to the controversy surrounding its anchor book allocation. The withdrawal of large funds, including Capital Group, Aberdeen Group, ICICI Prudential Asset Management, and Nippon India Life Asset Management, has raised concerns about the IPO’s success. However, the inclusion of global investors, such as GIC and BlackRock, is a positive sign for the company. Meesho will need to address the concerns about its allocation strategy and provide more transparency to regain investor confidence.
The controversy surrounding Meesho’s anchor book allocation is a reminder that the IPO process is complex and requires careful planning and execution. Companies need to ensure that their allocation strategy is fair and transparent, to avoid any controversy or disputes with investors. The Indian e-commerce industry is highly competitive, and companies need to be careful about their corporate governance and allocation strategy to attract and retain investors.
As the Indian e-commerce industry continues to grow and evolve, companies like Meesho will need to navigate the complexities of the IPO process to raise funds and expand their business. The controversy surrounding Meesho’s anchor book allocation is a lesson for other companies, which need to ensure that their allocation strategy is fair, transparent, and aligned with the interests of all stakeholders.
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