Paras Healthcare has collected Rs 652.50 crore from a group of large investors, just before its initial public offering (IPO) opens to the wider public on October 21.
The money came from what are known as anchor investors. These are big institutions that are invited to buy shares a day or so before an IPO starts. Their purchases are made at the same price that ordinary investors will pay, and the money is counted as part of the total being raised.
The list of buyers includes some well-known global names. Abu Dhabi Investment Authority took part, as did BlackRock Global Funds and Eastspring Investments. Government Pension Fund Global, Natixis International Funds, Integrated Core Strategies (Asia) and Citigroup Global also joined the round.
Companies often like to line up anchor investors because their involvement can send a useful signal. When respected funds agree to buy in early, smaller investors may feel more comfortable about applying. It can also help a company build momentum and reduce uncertainty about whether the issue will be fully subscribed.
Anchor investors are usually required to hold their shares for a set period, which helps limit sudden selling right after the stock begins trading. This can offer some stability in the early days of a new listing, though it does not guarantee how the shares will perform.
Once the offer opens on October 21, retail buyers, wealthy individuals and other institutions will be able to submit bids for the remaining shares. The anchor round has already shown that several large overseas and institutional investors are interested in the company.
As with any IPO, people considering an application should read the offer documents carefully. These explain the company’s finances, business plans, risks and how the money raised will be used. Strong early backing from big funds can be encouraging, but each investor still needs to decide whether the price and the business suit their own goals.