India’s largest carrier IndiGo launched the country’s biggest initial public offering (IPO) in three years Tuesday, seeking to raise USD460 million to extend its dominance of the budget airline sector.
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The IPO generated demand worth over Rs 4,000 crore, as it received bids for 4,67,45,535 shares against total issue size of 3,01,22,088 shares, taking the overall subscription to 1.55 times, data available with the NSE till 1700 hrs showed.
The quota reserved for qualified institutional buyers (QIBs) saw tremendous response with over-subscription of 17.79 times, sources said.
The IPO could give IndiGo a market value of up to $4 billion, compared to market capitalization of less than $1 billion for its rivals like Jet Airways (India) and SpiceJet Ltd. “Retail investors want listing gains, but that is not being seen in the case of this IPO”, said Deven Choksey, group managing director and chief executive officer of KR Choksey Shares and Securities Pvt. Only 82 per cent of the portion reserved for the retail category was subscribed on the third and last day of sale. The offer invites subscrition in the price band of Rs 700-765 per share.
Previously, the company raised Rs 832 crore (about $128 million) from a group of investors, including sovereign funds of Norway, Singapore and Kuwait, who came in as anchor investors.
These anchor investors include Fidelity Investments, GIC Pte Ltd, Acacia Partners LP, HDFC Trustee Co.
The anchor book is that portion of the IPO that bankers can allot to institutional investors on a discretionary basis. Existing shareholders will sell a little more than 2.28 crore shares instead of the 2.61 crore share sale planned earlier. Mutual funds bid for 2,19,72,465 shares, while Retail Individual Investors (RIIs) have been lagging with a bid of 35,84,550 shares against the issue size of 1,35,79,407.
The share sale will run for three days and is the largest in India since December 2012, when telecom infrastructure provider Bharti Infratel raised 41.7 billion rupees, equivalent to USD638 million today.
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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.
