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ADV Partners-backed Amber Enterprises’ IPO oversubscribed 165x on final day

19 January, 2018

Amber Enterprises India Ltd, an original equipment manufacturer of white goods catering to global players such as Whirlpool and Daikin, attracted a massive turnout from investors for its initial public offering (IPO) on the final day on Friday.

The public offering of 4.92 million shares, excluding the anchor allotment, received bids for 813.09 million shares, stock exchange data showed. The book was subscribed 165 times and converts into bids worth Rs 69,844 crore.

The bumper turnout is proof of continuing momentum in the IPO market after a record 2017 when three dozen companies raised a little over Rs 67,000 crore ($11 billion).

Last week, Apollo Micro Systems’ IPO – the first of 2018 – saw record demand. The Rs 160 crore IPO was oversubscribed 248 times.

The IPO of New Delhi-headquartered IT firm Newgen Software Technologies Ltd was subscribed eight times on its final day on Thursday.

Amber’s IPO
In Amber’s IPO, the quota of shares reserved for qualified institutional buyers was subscribed 175 times the 1.39 million shares on offer, stock exchange data showed. The retail portion, in which bids cannot exceed Rs 2 lakh, was covered 10.83 times of the 2.43 million shares on offer. The portion set aside for non-institutional investors, comprising corporate bodies and wealthy individuals, was subscribed 520 times.

On the grey market, shares of Amber were quoting a premium of Rs 480-490 per share, up 55-57% its IPO price, said two dealers requesting not to be identified.

Grey market is a pseudo, over-the-counter market where IPO shares are traded before the official listing on a stock exchange.

The IPO had been fully subscribed on day one on Wednesday. Bidding for Amber shares picked up on Thursday with the IPO subscribed 3.6 times.

Ahead of the IPO, the company raised Rs 178.71 crore ($28 million) by selling shares to a bunch of anchor investors, including the sovereign wealth funds of Abu Dhabi and Kuwait.

Amber Enterprises allotted 2.08 million shares on Tuesday to 15 institutional investors at the upper end of the Rs 855-859 price band, according to a separate stock exchange filing.

Amber, which is backed by Asia-focussed private equity firm ADV Partners, is seeking a valuation of Rs 2,701.25 crore ($425 million) from the public offering.

At the upper end of the price band, the company will issue nearly 5.53 million fresh shares while promoters Jasbir and Dalgit Singh will sell 1.45 million shares.

VCCircle had reported recently that ADV Partners is sitting on sizeable gains from its one-year-old bet in Amber Enterprises.

The total issue size is now Rs 600 crore, bigger than the Rs 555 crore Amber had proposed at the time of filing its draft prospectus with the Securities and Exchange Board of India (SEBI) in September. It received regulatory approval for the IPO on December 5 last year.

Amber will use Rs 345 crore of the net proceeds to repay loans. The balance amount from the Rs 450 crore of fresh proceeds will be used for general corporate purposes, after meeting offer-related expenses.

Edelweiss Financial Services, IDFC Bank, SBI Capital Markets and BNP Paribas are the merchant bankers managing the IPO.

The company
The company makes air conditioners, microwave ovens, components for refrigerators and other consumer durable products for clients such as Videocon, John Deere, Swaraj Mazda, Godrej, Whirpool, Blue Star, Philips and Voltas.

In addition, the group runs Amber Aviation, which operates aircraft charters and provides commercial pilot training. Amber’s promoters also entered the off-grid solar power generation sector in 2015 in partnership with Silicon Valley-based Twin Creeks Technologies.

Amber serves eight of the 10 top room air-conditioner brands in India and counts Daikin, Hitachi, LG, Panasonic, Voltas and Whirlpool as its key customers. It claims a market share of 55.4% in this category by volume for the year ended March 31, 2017.

The company was founded in 1994 with a single factory in Punjab. It now has 10 manufacturing units across seven locations, of which six are operational. The company was set up by Kartar Singh and is now managed by his sons Jasbir and Daljit.

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ADV Partners-backed Amber Enterprises’ IPO oversubscribed 165x on final day

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