The initial public offering (IPO) of Affle (India), the local arm of Singapore-based mobile solutions company Affle Holdings Pte. Ltd, picked up pace on the second day on Tuesday, with retail investors leading the charge.
The public offering of 3.37 million shares, excluding the anchor allotment, was covered 81% after receiving bids for nearly 2.73 million shares at the end of day two, stock-exchange data showed.
The portion set aside for qualified institutional buyers (QIBs) was subscribed 37% thanks to bids from foreign investors, while the quota of shares reserved for retail investors was covered 3.2 times.
Non-institutional investors, such as corporate houses and affluent individuals, bid for nearly 10% of the shares reserved for them.
High net-worth individuals (HNIs) typically invest in very large quantities on the final day of the issue to save on the interest cost. HNIs borrow short-term capital from various avenues, barring banks, to fund their IPO applications in what is known as IPO financing. These investors deploy a small fraction of their own capital—which is called margin money—upfront. Additional capital raised through short-tenure loans help HNIs or wealthy investors place large bids in an IPO.
On the grey market, shares of Affle India were quoting at a premium of Rs 180-200 apiece over the price band. This indicates high demand for the company’s shares and means that HNIs might place more bids on the third and final day on Wednesday, two grey market dealers told VCCircle. The IPO had crossed the one-fourth mark on day one on Monday.
Affle India is the first multinational company to float an IPO in India in over 12 years. Credit rating firm ICRA Ltd was the last Indian company with a multinational parent to go public, in March 2007. After the IPO, promoter holding in Affle India will drop to about 68.4% from 92.17%.
Last Friday, the company attracted a number of marquee institutional investors such as Scottish investment firm Aberdeen Standard Investments, Franklin Templeton Investment Fund, existing investor Malabar Investments, and Hornbill Orchid Fund, an India-focused firm anchored by China-based private equity manager Orchid Asia, among others as part of its anchor book.
In total, Affle raised Rs 206.55 crore (nearly $30 million at current foreign exchange rates) by allotting a little over 2.77 million shares to 15 anchor investors. Shares were allotted at the upper end of the Rs 740-745 apiece price band.
The company is seeking a valuation of Rs 1,900 crore ($275 million at current exchange rates) from the IPO at the upper end of the price band.
The IPO comprises a fresh sale of shares worth Rs 90 core and a sale of about 4.95 million shares by Affle Holdings. The parent company, which is itself backed by Microsoft and Times Internet, had previously planned to divest 5.5 million shares at the time of filing the IPO documents in July last year.
The total IPO size is now Rs 459 crore ($66.5 million).
In May last year, VCCircle exclusively reported that Affle was looking to raise $100-110 million by listing the India unit.
ICICI Securities and Nomura are the merchant bankers managing the Affle India IPO.
The company was founded in 2006 by Anuj Khanna Sohum and Anuj Kumar. It has created a Mobile Audience as Service (MAAS) platform, besides various other platforms and services such as ad2campaign and Ripple used by global commerce and marketing firms to promote their mobile programmes.
Affle operates through seven offices worldwide having over 236 employees as on May 2019. Besides Singapore, the company has offices in Gurugram, Mumbai, Jakarta and Kuala Lumpur.
The company announced the launch of its fraud-analytics-as-a-service platform (mTraction FaaS) in Japan in October last year to detect and prevent mobile advertising fraud.