Endurance Technologies Ltd.
The initial public offering of Endurance Technologies Ltd, an Aurangabad-based automobile parts maker, was subscribed 43.7 times. Endurance was established in 1985 as Anurang Engineering Co. Pvt. Ltd to manufacture aluminium die casting products in Aurangabad, Maharashtra. The company derives almost 44% of its revenue from its aluminium casting business and the rest comes from suspension, transmission and braking products. Endurance has 24 manufacturing facilities—17 in India, five in Italy and two in Germany. Some of its customers include Bajaj Auto Ltd, Honda Motorcycle & Scooter India Ltd, Royal Enfield, India Yamaha Motor, Hero Motorcorp, Mahindra & Mahindra and Tata Motors.
The issue received bids for 752.6 million equity shares as against 17.2 million shares on offer. The quota reserved for qualified institutional buyers was covered 53.43 times, while non-institutional investors’ portion was subscribed 127 times. Retail investors, whose investments cannot exceed Rs.2 lakh in an IPO, bid for about 2.5 times their quota.
Endurance Technologies raised Rs 348.5 crore by allocating shares to anchor investors, at Rs 472, the upper end of the IPO price band of Rs467-472. The anchor book is the portion of the IPO which bankers can allot to institutional investors on a discretionary basis. Anchor book subscription opens a day before the launch of an IPO and acts as an indicator of institutional investor interest.
The Endurance IPO is a pure offer for sale by existing investor Actis and promoter Anurag Jain. While Actis is selling 19.29 million shares while Jain is selling 5.3 million shares. The issue will constitute up to 17.5% of the company’s post-offer capital. Axis Capital and Citigroup Global Markets were the book-running lead managers to the issue.
ICICI Prudential Life Insurance Company Ltd
Incorporated in 2001 as a joint venture between ICICI Bank Limited and Prudential Corporation Holdings Limited, ICICI Prudential Life Insurance Company Ltd is a Mumbai based largest private sector life insurer in India. Among the 23 private sector life insurance companies in India, ICICI has a market share of 21.9% on a retail weighted received premium basis.
ICICI Prudential Life Insurance’s Rs 6,000 crore initial public offering (IPO) issue received applications for 10.42 times the issue size at close of the bidding process at the end of third and final day. This was the biggest IPO since the Coal India issue, which hit the market in 2010.
Data available with BSE and NSE showed the biggest IPO in nearly six years attracted bids for 138 crore shares on Day 3 of the bidding process. This was against the issue size of 13.24 crore shares. Retail individual investors bid for 7.43 crore shares, or 1.30 times of the quota limit of 5.71 crore shares. The portion reserved for ICICI Bank shareholders was subscribed to 10.42 times. The quota for non-institutional investors was subscribed to 11.83 times, while the QIB portion got subscribed 28.55 times. The insurer had allotted Rs 1,635 crore worth of shares to anchor investors.
Considering the recently-announced merger of Max Life with HDFC Life, the valuation of ICICI Prudential looks reasonable. At the upper end of the price band, the company is valued at about Rs 48,000 crore.
L&T Technology Services
L&T Technology Services, subsidiary of engineering & construction giant Larsen and Toubro which opened for subscription during September 12-15 for its Rs 894-crore issue, was oversubscribed 2.52 times. It is the second company from the L&T Group to hit the capital market with an IPO since July 2016, after L&T Infotech that listed on July 21. L&T Technology Services through its IPO offered to sell 10.4 million shares. The offer was bifurcated into QIB portion of 5.2 million shares, non institutional portion of 1.56 million shares and retail portion of 3.64 million shares. The proceeds from the IPO went to the promoter shareholders. The promoter was looking to dilute shareholding in the company from current 100 percent to 89.8 percent.
Of the total, 50.3 percent of revenue in FY16 was derived from the three segments of industrial products, process industry and medical devices. L&T Group Chairman AM Naik the company is targeting 15-percent increase in revenue to USD 525 million in the current fiscal and USD 1 billion over the next three to four years through inorganic growth. He said the company wants to double revenue to USD 1 billion over the next three-four years, and will be looking at acquisitions with revenue of USD 150-200 million to achieve the target. It operates in five industry segments – transportation, industrial products, telecom and hi-tech, process industry and medical devices.
RBL Bank Ltd.
Private sector lender RBL Bank Ltd (formerly Ratnakar Bank) received a stellar response to its Rs.1,211 crore initial public offering (IPO). The three-day issue drew subscriptions that were 69.57 times the issue size—excluding the anchor allotment—registering the highest overall subscription among IPOs of private sector banks.
RBL Bank received applications for roughly 2.64 billion shares compared with an issue size of 37.9 million shares, excluding the anchor allotment, stock exchange data showed.
At the lower end of the Rs.224-225 price band for the issue, the IPO drew bids worth roughly Rs.59,006.52 crore. The institutional investor category received bids for 924.36 million shares and the book was subscribed 85.08 times, data showed. The non-institutional category comprising high networth individuals was subscribed 198.05 times, data showed. Demand from retail individual investors, whose investments cannot exceed Rs.2 lakh in an IPO, stood at 5.60 times the 18.92 million shares on offer. The Mumbai-headquartered private sector lender raised Rs.363.88 crore by selling shares to anchor investors.
Merchant bankers were enthused by the response to the IPO despite weakness and volatility in secondary markets. That aside, hefty grey market premium—hinting sharp listing gains—also drew investors in large numbers. The bank, led by a new management team, has been growing at a healthy pace without deteriorating its asset quality and the fundamentals have helped garner a strong response.”
RBL Bank will become the country’s first private sector bank to go public in more than a decade. The last private sector bank to launch an IPO in India was Yes Bank Ltd, which raised Rs.315 crore in July 2005.
The bank aims to raise its capital base for growth and comply with incremental capital needs under the Basel-III norms as well as the Reserve Bank of India’s norms. The bank’s income grew at an annual rate of 50% compounded over the last five years. Its return on equity has also doubled in the past five years, according to data made available in the issue documents.
L&T Infotech’s Rs 1,243-crore IPO got oversubscribed 11.67 times, eliciting strong response with the number of applications crossing 1 million on the final day.
Quota reserved for qualified institutional buyers (QIBs) was oversubscribed 19.90 times, while that of HNI 10.75 times, sources said. The category reserved for retail investors was also oversubscribed 7.30 times.
L&T Infotech has attracted 10.58 lakh or 1.058 million applications, the largest number of applications in IPOs since 2011. L&T Infotech had fixed a price band of Rs 705-710 per share for the offering. It had raised Rs 373 crore from anchor investors by selling shares at Rs 710 apiece. The IPO comprised an offer-for-sale of up to 1.75 crore equity shares by L&T Ltd. It constitutes 10.3 per cent of the post offer paid-up equity share capital of the company.
In the financial year 2015-16, L&T Infotech’s revenue from operations and other income stood at Rs 6,143.02 crore, while it clocked a profit after tax of Rs 922.17 crore during the same period. L&T Infotech is the sixth largest Indian IT services player at present with a revenue of USD 887 million and an employee base of over 20,000 people.
Parag Milk Foods Ltd.
Dairy company Parag Milk Foods Ltd’s initial public offering (IPO) managed to sail through after an extension of its closing and a cut in the lower end of its price band in May 2016.
On 6 May, when the IPO was first slated to close, the portion set aside for institutions was not completely filled in and the firm had to extend it to 11 May. The company also lowered its price band to Rs.215-227 a share from Rs.220-227.
Capital markets regulator (Sebi) Issue of Capital and Disclosure Requirements stipulate full subscription from institutional investors. The IPO finally concluded with a 1.15 times total subscription. The issue was priced at Rs.215 for institutional investors and Rs.203 for retail investors.
Slow demand and choppy market drove Parag Milk Foods to lower its offer price for its maiden issue as well extend the closing date for receiving applications from investors.
The issue opened for subscription on May 4 but received a muted response, partly due to its steep pricing, analysts said. According to market grapevine, the IPO may have been extended as some institutional investors could not upload their bids due to technical issues. However, this was not confirmed by the intermediaries involved in the equity offering.
Based on the price band, the firm raised Rs.751 crore, of which Rs.300 crore will go to Parag Milk as fresh capital. The remainder will go to shareholders, including IDFC Private Equity and Motilal Oswal Financial Services Ltd.
In 2014-15, Parag Milk Foods reported a revenue of Rs.1,440.8 crore, up from Rs.1,087 crore in the previous year. It reported a profit of Rs.29.4 crore in 2014-15, up from Rs.14.5 crore, according to the company’s prospectus.
The company intends to utilise the money raised from fresh shares to expand and modernise existing manufacturing facilities at Manchar and Palamaner and improve its marketing and distribution infrastructure by investing Rs 147.70 crore.
The company also intends to use Rs 100 crore for partial repayment of a consortium loan for working capital, Rs 50 crore for general corporate purposes and company’s share of issue expense and Rs 2.30 crore for investment in Bhagyalaxmi Dairy Farm.
Mahanagar Gas, the country’s second largest CNG retailer raised Rs 1040 crore through its IPO with price band at Rs 380-421. The initial share sale of Mahanagar Gas was oversubscribed 64.54 times. The IPO was open for subscription between June 21-23.
Mahanagar Gas, promoted by state-run GAIL and British Gas Asia Pacific Holdings, made an offer for sale of up to 24,694,500 equity shares of Rs 10 each. The money raised through the IPO accrued to the promoters who are selling their stake. Mahanagar Gas is a major distributor of (CNG) and piped natural gas (PNG) in Mumbai and adjoining areas. It has a city gas infrastructure network of 188 CNG filling stations with a compression capacity of 3.1 million kg/day in FY16, providing CNG to over 0.47 million vehicles. MGL’s sales volume and revenue grew at the CAGR of 5.7 percent and 12.3 percent, respectively over FY12-FY16.
Equitas Holdings Ltd.
Equitas Holdings Ltd’s Rs.1,525 crore initial public offering (IPO) drew demand for more than 17 times the number of shares on sale because of strong interest from local financial institutions.
The share sale sailed through smoothly on the final day of subscription even though foreign institutional investors were not allowed to participate in the first IPO of a small finance bank licencee. The share sale is the largest primary issue which was open only to domestic subscriptions, said bankers.
Equitas, one of the eight microfinance institutions that won small finance bank licence by the Reserve Bank of India (RBI) last year, received bids worth Rs.26,000 crore, data from the stock exchanges showed.
The institutional investors’ category was subscribed nearly 15 times the 39.8 million shares on offer. The retail and high net worth individuals (HNIs) categories were subscribed 1.4 times and 57.3 times, respectively. The company raised Rs.652.18 crore by way of anchor allotment at Rs.110 per share, the upper end of the Rs.109-110 price band. The public issue was worth Rs.2,176 crore in total.
Foreign portfolio investors, or FPIs, were not allowed to buy shares in the IPO as their holdings already exceed the limit stipulated by RBI. The guidelines for small finance banks limit foreign shareholding to 49%. At all times, at least 26% of the paid-up capital will have to be held by residents or domestic investors, said the statutory guidelines for small finance banks. Foreign holding in Equitas currently stands at 92.64%, according to the red herring prospectus.
In the so-called grey market, Equitas’s shares were quoting at a premium of Rs.20 per share, indicating significant investor interest, dealers said. The grey market, which is largely driven by rich investors subscribing to a large quantity of shares, is an over-the-counter market where IPO shares are bought and sold before a company officially lists on the stock exchange. It gives a broad indication of the appetite for a public issue.
Investors were undeterred by the untested business model of small finance banks and the fact that the company does not have the backing of any prominent promoter group.