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Photo Credit: Manmohan Shetty

Adlabs Entertainment IPO struggling; covered under 20% with one day to go

11 March, 2015

The initial public offer (IPO) of Manmohan Shetty-promoted Adlabs Entertainment Ltd, the firm behind theme park Adlabs Imagica, appears to be struggling with less than 

one-fifth of the issue being covered at the end of day 2.

It now needs to attract investors on the last day to see through the issue.

It had got off to a slow start seeing less than 3 per cent subscription at the end of day 1. Although this picked up on day 2, and many issues sees investors joining in the dying hours to apply for shares, it has a long way to cover as of the end of the penultimate day.

The issue, which closes on March 12, has seen institutional investors bid for just under 18 per cent of the issue reserved for them; HNIs & corporates (9.3 per cent); retail (over 34 per cent).

On day 1 it saw zero participation from institutional investors with HNIs & corporates bidding for 7 per cent of their portion and retail investors pitching in with 15 per cent of the shares reserved for them.

The poor response to the issue comes after near casualty of a previous IPO. Last week, Ortel Communications had just managed to scrape through to the finishing line after its PE backer New Silk Route decided to cut the size of its own offer-for-sale as part of a larger issue.

Adlabs Entertainment had earlier raised Rs 60 crore (just under $10 million) from a bunch of anchor investors including a hedge fund under Edelweiss, besides a string of mutual funds under Axis, L&T Fin, HDFC AMC and a fund under Daiwa. Notably, the anchor investors have picked the shares at the lower end of the Rs 221-230 a share price band of the IPO.

Adlabs had earlier snipped the proposed size of the public issue after the pre-IPO placement. When it had filed its draft red herring prospectus last year it had said it plans to issue 23 million shares, including 2 million shares offered for sale by the promoters.

The firm sold a small stake to NYLIM Jacob Ballas India Holdings IV (NYLIM-JB) and Jacob Ballas Capital India Private Ltd (JBC), raising Rs 50 crore in the process.

This brought the second PE investor into its fold as the firm had earlier raised money from ICICI Venture in 2013.

Post conversion of convertible securities into shares, ICICI Venture now holds 16.95 per cent stake while NYLIM-JB owns 4.13 per cent and Jacob Ballas separately owns 0.22 per cent.

While ICICI Venture is sitting on unrealised gains of around 66 per cent on its investment, Jacob Ballas is potentially sitting on 23 per cent upside at the upper end of the price band.

Adlabs Entertainment’s issue is being managed by Deutsche Equities, Centrum Capital and Kotak Mahindra Capital.

(Edited by Joby Puthuparampil Johnson)


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Adlabs Entertainment IPO struggling; covered under 20% with one day to go

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