Forced by the investors, Bangalore-based real estate development firm Puravankara has revised the price band downwards for its initial public offering (IPO) in the range of Rs 400 to Rs 450 and also extended the closing of the issue to August 8. Earlier, the company had fixed the price band in the range of Rs 500 to Rs 525 per equity share of Rs 5 each and the issue was to close on Friday.
This is the first instance of a major issuer going for the revision in its price band and extending the issue closure date, the markets experts said.
?It was not the fear of under subscription, but based on the market sentiment and investors feedback, we decided to lower the price band. The volatility in the global and Indian market is unprecedented and one of its kind. It had a ripple effect,? a top company official told FE .
However, market experts in Mumbai expressed that the company move was based strictly on the fear of undersubscription because of aggressive pricing of the issue and current volatile market situation. On Friday, as per the NSE, the issue was subscribed 32.06% by qualified institutional buyers (QIBs), 13.9% by the non-institutional investors (NIIs) and 49.66% by the retail individual investors (RIIs) taking the total to 95.62%.
The company had originally planned to raise Rs 1,075 crore to Rs 1,120 crore through the IPO for its expansion. Of the total funds, the planned to utilise around Rs 351 crore for land acquisition and Rs 419 crore for repayment of loans, while the remaining funds was to be used for general corporate purposes.
?The short fall in the funds raised on account of the revision in the lower end of the price band is intended to be adjusted against the general corporate requirement,? the company said.
It also said that bids submitted by the bidders at any price in the original price band Rs 500- 525, would be treated as bids at the higher end of the revised price band of Rs 450. The bids submitted by bidders at the cut-off price in the earlier price band will be treated as bids at the cut-off price in the revised price band. The minimum application size and bid lot continue to remain at 10 equity shares.