NEW YORK: Some investors in US initial public offerings (IPOs) are demanding rules what they see as unequal treatment in the rules around how stock is allocated to so-called cornerstone investors in new listings.

       An overwhelming 87% of 62 institutional investors said anchor investors – who agree to buy IPO shares before the offerings are sold to a broader group – should be required to hold onto their shares for a specified period after the listing, according to a KKR Capital Markets survey in December.

       In several prominent recent US listings where the companies chose to involve so-called cornerstones, no such restrictions on selling were imposed.

       The polled investors, who collectively manage more than US$10 trillion in assets under management, were almost evenly split as to whether anchor investors should be introduced at all.

       The survey comes after a group of sizeable IPOs in the second half of last year allocated as much as 90% of the available stock to a concentrated group of large, long-only investors. While bankers touted the benefits of having such investors on board as providing added confidence and stability for the deal, and there have been no indications that anchors sold down their stakes, companies such as Arm Holdings Plc and Birkenstock Holding Plc still saw choppy trading after their debuts. The slumps have weighed on sentiment for other potential issuers.

       “For those companies that come to market with anchor investors, it will be important to see those anchors ‘put their money where their mouth is’, with a true lock-up structure in place to ensure alignment with new investors,” said David Bauer, head of KKR’s public equity capital markets business.

       Nearly 70% of the investors polled by KKR think the lock-up duration should be 180 days, and another 11% believe it should be even longer, at 360 days.

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       Investors surveyed are generally upbeat about prospects of this year’s IPOs, with 61% saying they don’t expect the presidential election to reduce their appetite for new issues.

       Many respondents also expect the US Federal Reserve to cut rates, with 59% of them forecasting the 10-year US Treasury will end the year yielding between 4% and 4.5%, the survey showed.

       Last year’s fall class of new listings was characterised by prominent investors taking stakes in the new offerings, which had been relatively rare in the United States before regulatory reforms in 2019. — Bloomberg