The initial public offering of K Raheja Corp-promoted Chalet Hotels Ltd made a slow start on Tuesday as institutional and retail investors largely stayed on the sidelines.
The issue received bids for 2.8 million shares, or 6.7% of the 41.3 million shares on offer, stock-exchange data showed.
Retail investors bid for barely 0.3% of the shares set aside for them while the quota for institutional investors was covered just 1%. The non-institutional book was covered 30%.
Separately, Chatel Hotels raised Rs 492.35 crore ($69 million) from 27 anchor investors that included Blackrock, Goldman Sachs, Kuwait Investment Authority and HDFC Standard Life Insurance Co. It allotted 17.6 million shares at the upper end of the Rs 275-280 price band.
The IPO of Chalet Hotels is the first of 2019 and first large-sized mainboard issue after a four-month gap. Chalet is part of a long list of companies that have been looking to go public.
The IPO comprises a fresh issue of Rs 950 crore and a secondary market sale of 24.685 million shares by the promoter and promoter group.
Chalet Hotels, which owns and operates hotel and apartment units such as the Lakeside Chalet Marriott Executive Service Apartments and the Renaissance Mumbai Hotel and Convention Centre, is seeking a valuation of as much as Rs 5,740 crore ($806 million).
The total size of the IPO is estimated at Rs 1,642 crore ($230 million) at the upper end of the price band, significantly lower than the estimated Rs 1,800-2,000 crore it was looking to raise when the company filed its draft prospectus last July.
The markdown reflects Chalet’s quest to attract investors at a time when the secondary markets remain volatile and uncertainty prevails owing to various economic and political factors, leaving issuers and investors cagey.
K Raheja Corp, through its subsidiaries, operates in the real estate, hospitality, retailing and power distribution sectors in India. The group is looking to use Rs 720 crore of the fresh net proceeds to repay debt and the balance amount for general corporate purposes.
Chalet was originally incorporated in January 1986 as Kenwood Hotels Pvt. Ltd. The company owns, develops and manages high-end hotels in key metro cities in India.
It operates five hotels, including one with a co-located serviced residence, in the Mumbai Metropolitan Region, Hyderabad and Bengaluru. It had 2,328 rooms as of 30 September 2018.