People familiar with the development said that MFs and insurance companies cumulatively bid for nearly 27.7 crore shares against 7.3 crore shares on offer at a discounted price of Rs 136.5 per share. The company had originally set a floor price of Rs 143.7 per share in line with the Securities and Exchange Board of India's (Sebi) formula for private placement. ICICI Prudential AMC, Reliance AMC, HDFC, AMC and ICICI Prudential Life Insurance were among the prominent domestic institutions that participated in the private placement, sources said.
The share sale is pursuant to the Reserve Bank of India (RBI) guidelines to lower foreign institutional investor (FII) holding in the company to below 50%. After the fresh issue, FII holding will now drop to 49.42% from 51.81% as on the quarter ended June 2014, shareholding data on BSE show. In the cash segment, IDFC shares surged more than 5% in the first half an hour of trade to their highest level in nearly a month. The scrip eventually settled with gains of 3.52% (Rs 5.10) at Rs 150.05 a share on the BSE.
Seven bankers CLSA, Credit Suisse, ICICI Securities, IDFC Capital, JM Financial, JPMorgan and Kotak Investment Banking were managing the share sale programme.
Many domestic and foreign financial services firms have a positive view on the stock, citing in the firm's return on equity (RoE) and low valuations.
According to American investment banking firm Morgan Stanley, IDFCs RoE is expected to rise to 16.5% in FY22 from low double digits backed by RBI's infra financing norms. At 1.2x F16e book value, with a strong balance sheet and good management team, IDFC is a good play on Indias growth and structural reform, Morgan Stanley said in research note.