The initial public offering (IPO) of Adlabs Entertainment successfully sailed through on the final day, albeit with the help of an extended deadline and a reduced price band. After six days of bidding, the book was subscribed a little more than 1.1 times as on 6:30 pm IST on Tuesday, stock exchange data showed.
Bulk of the bids poured in from retail as well as institutional investors. The qualified institutional buyers (QIB) category bid 1.463 crore shares against 1.252 crore shares on offer, according to stock exchange data.
Mumbai-based Adlabs is assured of R375 crore, inclusive of the anchor book, following the revised price band. The company had aimed to raise about R450-460 crore from the public issue.
The institutional book was subscribed 1.17 times with bulk of the bids received after the revised price band, data showed. About to six-seven foreign institutional investors (FIIs) and 10-11 domestic institutional investors (DIIs) have participated in the issue.
The retail book was subscribed 1.37 times. Investors bid for nearly 27.9 lakh shares against 20.3 lakh shares on offer. A discount of R12 offered to retail investors is still maintained.
Market sources said a weak secondary market led to muted response to the IPO. More so, shares in the grey market – a pseudo over-the-counter market where IPO shares are bought and sold before officially listing on a stock exchange – were quoting at a discount of R25-40 to the original price band of R221-230. The company eventually reduced its price band to R180-215 per share.
On March 9, a day before the launch and week after benchmark indices touched new highs, the Sensex declined more than 600 points – the biggest single day fall in two months. The Sensex is down nearly 4% since then.
Industry observers also noticed that investors deemed the pricing of the issue unconvincing given that both Ortel Communications and Adlabs Entertainment have reported losses in the recent past. Odisha based Ortel reported net loss for the five financial years to fiscal 2013-14, and posted a profit of R6.6 lakh crore in the first half of FY15.
The company plans to utilise R330 crore or nearly two third of its IPO proceedings in partial repayment or prepayment of the consortium loan as per the objects of the issue.