Meesho faces investor protest over anchor allotment to SBI Funds
The Indian e-commerce industry has been abuzz with the latest developments surrounding Meesho, a social commerce platform that has been making waves in the market. The company, which has been preparing for its initial public offering (IPO), has faced a significant setback after its anchor book faced investor withdrawals. The reason behind this exodus of investors is the significant allocation of anchor book to SBI Funds Management, which has prompted other large funds to exit in protest.
According to reports, Meesho’s anchor book had allocated a substantial portion of its shares to SBI Funds Management, a move that did not sit well with other large investors. As a result, several prominent investors, including Capital Group, Aberdeen Group, ICICI Prudential Asset Management, and Nippon India Life Asset Management, among others, withdrew their investments from the company’s anchor book. This development has raised eyebrows in the investment community, with many questioning the rationale behind Meesho’s decision to allocate such a large chunk of its shares to a single investor.
Despite this setback, Meesho’s IPO lineup still boasts an impressive array of global investors, including GIC and BlackRock. The company’s ability to attract such prominent investors is a testament to its strong business model and growth potential. However, the controversy surrounding the anchor allotment to SBI Funds Management has cast a shadow over the company’s IPO plans, at least for now.
The anchor book is a critical component of an IPO, as it provides a platform for institutional investors to invest in the company before the public offering. The anchor book is typically allocated to a select group of investors, who are then required to hold their shares for a lock-in period. The allocation of the anchor book is usually done on a discretionary basis, with the company and its investment bankers deciding which investors to allocate shares to.
In Meesho’s case, the allocation of a significant portion of its anchor book to SBI Funds Management has raised concerns among other investors. The move is seen as a departure from the usual practice of allocating shares to a diverse group of investors, and has prompted allegations of favoritism. The fact that other large investors have withdrawn their investments from the company’s anchor book in protest suggests that there is a deeper issue at play here.
The controversy surrounding Meesho’s anchor allotment to SBI Funds Management also raises questions about the transparency and fairness of the IPO process. The allocation of shares to institutional investors is typically done behind closed doors, with little transparency or accountability. This lack of transparency can lead to allegations of favoritism and cronyism, which can undermine the integrity of the IPO process.
In recent years, the Indian capital markets regulator, the Securities and Exchange Board of India (SEBI), has taken steps to increase transparency and accountability in the IPO process. The regulator has introduced measures such as the allocation of shares to institutional investors through a transparent bidding process, and the disclosure of anchor investor allocations. However, the controversy surrounding Meesho’s anchor allotment to SBI Funds Management suggests that there is still more work to be done to ensure the fairness and transparency of the IPO process.
As Meesho prepares to launch its IPO, the company will need to address the concerns of investors and regulators alike. The company will need to demonstrate its commitment to transparency and fairness, and provide assurances that its IPO process will be free from controversy. The company’s ability to attract prominent global investors such as GIC and BlackRock is a positive sign, but it will need to work harder to regain the trust of other investors who have withdrawn their investments in protest.
In conclusion, the controversy surrounding Meesho’s anchor allotment to SBI Funds Management is a significant setback for the company’s IPO plans. The withdrawal of investments by prominent investors such as Capital Group, Aberdeen Group, ICICI Prudential Asset Management, and Nippon India Life Asset Management, among others, is a clear indication that the company’s decision to allocate a significant portion of its anchor book to a single investor has backfired. As Meesho moves forward with its IPO plans, the company will need to address the concerns of investors and regulators alike, and demonstrate its commitment to transparency and fairness.
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