The initial public offering (IPO) of InterGlobe Aviation, which operates low-cost airline Indigo, ended on a high note on Thursday with subscriptions of R19,200 crore against the issue size of Rs 3,100 crore, as of 6.30 pm.
The issue saw tremendous response from qualified institutional buyers (QIB) and high net-worth individuals (HNIs) but retail investors and employees were less enthusiastic, probably because they felt the scrip was priced expensively.
So far this calendar year, 16 companies have raised close to Rs 7,500 crore from the primary market, the highest in last four years, data from Prime Database showed. The collections from the InterGlobe issue will take the IPO collections past the Rs 10,000 crore mark. However, of the last 17 IPOs, including that of InterGlobe, seven issues failed to see full retail subscription. InterGlobe’s IPO will be the biggest primary market offering since Bharti Infratel’s Rs 4,100-crore-plus public issue in December 2012, statistics compiled by Prime Database showed.
InterGlobe’s IPO is also the first by an Indian airline since the 2006 listing of Deccan Aviation, which was later taken over by Kingfisher Airlines. Jet Airways, then India’s largest private airline, raised Rs 1,900 crore in February 2005.
Sources in the know said investor Rakesh Jhunjhunwala placed a bid worth Rs 400 crore in the HNI category.
Many large, well-known corporate bodies as well as treasuries of various private sector banks and non-banking financial companies also participated in the issue, sources added. Large foreign brokerages such as Goldman Sachs and Credit Suisse, as well as hedge-funds like Factorial Capital, which was allowed re-entry into Indian markets in June 2015, also bid for InterGlobe’s shares, sources added.
V Jayasankar, senior ED and head, equity capital markets, Kotak Investment Banking, said the issue received tremendous response from all category of investors. “The book has a good mix of domestic and foreign institutional investors. In terms of retail book, we have received bids more than Rs 1,000 crore,” Jayasankar said.
Citigroup, JPMorgan and Morgan Stanley are the global coordinators for the issue while Barclays Capital, Kotak Investment Banking and UBS are the book-running lead managers for the issue.
The QIB portion was subscribed nearly 18 times as of 8 pm. A little over 15.17 crore shares were subscribed against 85.23 lakh shares reserved for this category. The non-institutional category comprising HNIs was subscribed 3.6 times on the last day. HNIs bid 2.078 crore shares against 58.2 lakh shares reserved.
The retail book was subscribed close to 92% of the shares reserved for the category. Retail investors, whose investment should not exceed a total Rs 2 lakh as per Securities and Exchange Board of India rules, bid for 1.25 crore shares against 1.35 crore on offer, data showed. The employees’ category was subscribed a meagre 12.5% of the 22 lakh shares on offer.
InterGlobe Aviation raised Rs 832.02 crore on Monday by allotting more than 1 crore shares to anchor investors in a pre-IPO placement at a price of Rs 765 per share. Names include Fidelity, the Singapore government, Merrill Lynch, Credit Suisse, Goldman Sachs, HDFC Mutual Fund, DSP BlackRock, and Abu Dhabi Investment, among others.
The company set a price band of Rs 700-765 per share for the three-day offering that ended on Thursday. At the upper price band, the company’s market capitalisation stands at nearly Rs 27,000 crore and ranks 22nd among the list of world’s most valued airline companies. US-based Delta Airlines is the world’s most valued airline company with a Rs 2.61-lakh-crore market capitalisation.
The IPO consists of a fresh issue of Rs 1,272.2 crore, and an offer for sale by promoters and existing shareholders to the tune of Rs 1,750 crore. Existing shareholders will sell a little more than 2.28 crore shares instead of the 2.61 crore share sale planned earlier.