The initial public offering (IPO) of BSE Ltd was oversubscribed 50 times on the final day of the issue on Wednesday, as investors rushed to bid for shares of Asia’s oldest stock exchange.
The public offering of nearly 10.8 million shares—excluding anchor investors’ portion—received bids for nearly 552 million shares by the end of the day, stock-exchange data showed. While retail investors had led subscription activity on the first two days, institutional and non-institutional investors jumped onto the bandwagon on the final day.
The portion set aside for non-institutional investors, such as corporate houses and wealthy individuals, was covered about 159 times. The institutional buyers’ quota was subscribed nearly 49 times.
The retail investors’ portion was covered more than six times times the shares reserved for them.
Merchant bankers were enthused with investors' response, and cited the business model and growth prospects for the issue's success.
“We believe this will become a long-term wealth creator for the investors,” said Vikas Khemani, president & head, Wholesale Capital Markets at Edelweiss Capital.
Dharmesh Mehta, chief executive and managing director, Axis Capital, said, “Despite market volatility after demonetisation and advancing event risks related to the Budget...the issue was also priced well and saw the best of global investors bid in the anchor book.”
The IPO by Asia’s oldest stock exchange is the first public offering by an Indian company in 2017. BSE is also the first Indian stock exchange—and the second bourse after Multi Commodity Exchange—to go public.
Various domestic and foreign financial securities firms had advised clients to subscribe to BSE’s IPO.
Geojit BNP Paribas Financial Services Ltd cited the exchange’s financial performance, its operating history, growth prospects and valuations, among other reasons, to subscribe to the IPO with a medium-to-long term perspective.
“Given the under-penetrated Indian financial markets, we are upbeat on the stock owing to its diversified revenue mix and continuous focus on introduction of new products & services. At (the) upper price band of Rs 806, it is available at 25.6x FY16 PE, which we believe is reasonably priced when compared to globally listed exchanges. Singapore Exchange, Japan Exchange Group, Deutsche Boerse trade in the range of 20-25x FY16 PE,” said analyst Rohit Joshi in a Geojit BNP Paribas report to clients on 20 January.
On the grey market, the premium that BSE shares were quoting at rose to Rs 155-160 per share from Rs 140-150 on Tuesday. The premium was being quoted on the price band of Rs 805-806, said two dealers on the condition of anonymity.
The grey market is an over-the-counter market where IPO shares are traded before officially listing on a stock exchange.
The IPO comprises an offer-for-sale of shares by about 300 shareholders including Singapore Exchange, US billionaire investor George Soros’ Quantum fund and a unit of Citigroup.
Singapore Exchange is selling its entire 4.67% stake while Quantum is offloading its 3.68% holding, according to information made available in the IPO documents. The notable names missing from the list of selling shareholders include Deutsche Boerse AG as well as state-run Life Insurance Corporation and State Bank of India.
The share sale will fetch about Rs 1,243 crore at the upper end of the price band of Rs 805-806. BSE, formerly Bombay Stock Exchange, is seeking a valuation of up to Rs 4,400 crore ($645 million) through the IPO that closes on Wednesday.
BSE had opened its anchor book on Friday and raised Rs 373 crore by issuing about 4.63 million shares to 25 investors at Rs 806 apiece.
BSE had previously said it will list its shares on bigger rival National Stock Exchange on or around 3 February. National Stock Exchange is also working to go public and will list its shares on the BSE.
The stock-exchange operator has appointed Edelweiss Financial Services Ltd, Axis Capital Ltd, Jefferies India Pvt Ltd and Nomura Financial Advisory and Securities (India) Pvt Ltd as lead bankers. Motilal Oswal Investment Advisors Pvt Ltd, SBI Capital Markets Ltd, SMC Capitals Ltd and Spark Capital Advisory (India) Pvt Ltd are the other bankers.
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