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Cochin Shipyard IPO subscribed 92%; SIS issue covered nearly twice

01 August, 2017

The initial public offering of state-run Cochin Shipyard Ltd was almost fully covered while that of CX Partners-backed Security and Intelligence Services (India) Ltd has received bids for almost two times the shares on offer.

Cochin Shipyard’s offering was covered 92%, having received bids for 31.31 million shares of the total 33.98 million on offer, at the end of the first day of the issue on Tuesday, stock-exchange data showed.

The retail book was covered 1.57 times and the portion set aside for qualified institutional buyers was covered 71.5%. The part reserved for non-institutional investors, comprising wealthy individuals and corporate clients, was 22% subscribed.

Cochin Shipyard is seeking a valuation of as much as Rs 5,872 crore ($912 million) through the IPO, which does not have an anchor book and will close on Thursday.

The company last week set a price band of Rs 424-432 per share for the IPO. At the upper end of the price band, the IPO size works out to Rs 1,468 crore. Cochin Shipyard will raise roughly Rs 980 crore via a fresh issue of 22.65 million shares while the government, acting as the sole selling shareholder, will mobilise the remaining by selling 11.32 million shares.

Overall, the IPO will result in a stake dilution of 25% on a post-issue basis. This will help the company comply with the Securities and Exchange Board of India’s norm of 25% minimum public float.

Cochin Shipyard had filed its draft prospectus for the IPO on 24 March, and it received regulatory approval on 20 April.

Its IPO is part of a record disinvestment target set for the forthcoming financial year by finance minister Arun Jaitley. The government is aiming to raise a record Rs 72,500 crore through capital receipts that comprise minority sales and strategic disinvestments as well as listing of state-owned companies.

In the first three months of this fiscal year, the government has mobilised Rs 6,700 crore by selling minority stakes in half-a-dozen companies. Last month, it sold a 2.6% stake in engineering giant Larsen & Toubro Ltd—held via Specified Undertaking of The Unit Trust of India—for Rs 4,158 crore. It also offloaded a 10% stake via an IPO of housing and urban infrastructure financier Hudco Ltd.

SIS IPO
The security services provider’s IPO of 5.31 million shares, excluding the anchor allotment, received bids for 10.27 million shares at the end of the second day of the issue, stock-exchange data showed. The IPO had crossed the one-third mark on Monday.

The retail portion received bids for seven times the shares on offer while the institutional investors’ category was subscribed 1.12 times. Non-institutional investors bid for 10% of the shares on offer.

Patna-based SIS had raised Rs 350.81 crore on Friday from anchor investors ahead of its IPO.

SIS is seeking a valuation of Rs 5,960 crore ($925 million) through the IPO. The public offering comprises a fresh issue of 4.44 million shares worth up to Rs 362.25 crore, besides a sale of 51.2 million shares worth Rs 417 crore by promoters and CX Partners. At the upper end of the price band, the IPO size works out to Rs 779.58 crore, resulting in a 13.1% stake dilution on a post-issue basis.

SIS, which claims to be India’s second-largest private security services firm, received regulatory approval for its IPO on 12 January. The company had filed its draft prospectus in September last year.

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Cochin Shipyard IPO subscribed 92%; SIS issue covered nearly twice

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