Amber Enterprises IPO fully covered on day one; ADIA, Goldman come in as anchors
Photo Credit: Shah Junaid/VCCircle

The initial public offering of white-goods maker Amber Enterprises India Ltd sailed through on the first day of the issue on Wednesday, thanks to bidding by institutions as well as retail investors.

The public issue of 4.92 million shares, excluding the anchor investors’ portion, received bids for 5.09 million shares, stock-exchange data showed.

The quota reserved for qualified institutional buyers was subscribed twice the shares on offer. The retail portion, in which bids cannot exceed Rs 2 lakh, was covered 89%.

The portion set aside for non-institutional investors, comprising corporate bodies and wealthy individuals, saw merely 10% bids. High-net-worth individuals (HNIs) typically bid on the final day of an IPO to keep their financing costs low. HNIs deploy a fraction of their own capital and borrow short-term capital from various avenues, barring banks, to place large bids in IPOs.

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

US investment banking major Goldman Sachs and BlackRock, the world’s largest asset management firm, also came in as anchor investors.

Abu Dhabi Investment Authority (ADIA) bought shares worth Rs 16.91 crore while Kuwait Investment Authority, Goldman and BlackRock each bought shares worth Rs 11.55 crore.

Indian asset managers and life insurance firms such as ICICI Prudential AMC, ICICI Prudential Life Insurance Co, HDFC Mutual Fund, HDFC Standard Life Insurance Co, Reliance Capital, SBI Mutual Fund, Aditya Birla Sun Life Trustee and Axis Mutual Fund also bought shares.

Anchor investors, who accept a one-month lock-in for a sizeable allocation of shares, offer support to a public offering. Their participation highlights the interest among institutional buyers, and sets a benchmark for the investor community at large.

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 that opens today and closes on Friday. 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 reported that ADV Partners is sitting on astounding 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 5 December.

Amber will use Rs 345 crore of the net proceeds to repay loans. The balance amount from the Rs 450-crore 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 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.

Besides, 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 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.

In 2012, Fairwinds Private Equity (then Anil Ambani-led Reliance Equity Advisors India Ltd) invested $12.6 million in Amber.

Fairwinds had acquired a 34% equity stake in Amber for Rs 110 crore in two tranches, in 2012 and 2013. In January 2017, Fairwinds’ entire stake of 34% was acquired by ADV Partners.

In 2011, Amber had raised Rs 30 crore from IFCI Venture Capital’s Green India Venture Fund via compulsory convertible debentures. That deal gave Amber’s promoter group buyback rights to the extent of 60% of the stake acquired by IFCI Venture Capital at an annualised return of 20%.

*This article has been updated to include details of the first day's bidding.

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