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Collateral damage: GreenSignal Bio’s IPO makes another attempt to sail through

18 November, 2016

GreenSignal Bio Pharma Ltd is trying to fend off the tag of being the first company to fail to see through its initial public offering (IPO) in almost two years.

The firm that had already pushed the closure of its IPO previously, has once again extended the time period by three more days while pruning the price band hoping to attract institutional investors.

The public issue will now close on November 22 and will run with a revised price band of Rs 68-76 per share compared with the original Rs 76-80 per share, as per a stock exchange announcement.

Although, the overall issue was fully covered at the end of the extended six-day issue period on Thursday, the firm did not manage to attract even a single bid by the qualified institutional buyer (QIB) category.

GreenSignal Bio had reserved as much as 75% of the issue for QIBs. As per the regulations, “Wherein at least 75% of the net issue shall be allotted on a proportionate basis to qualified institutional buyers (QIBs) (the ‘QIB portion’)… If at least 75% of the net issue cannot be allotted to QIBs, then the entire application money shall be refunded forthwith.”

Indian Overseas Bank (IOB) is the sole financial advisor to the issue.

“Market conditions have been a bit unfavourable because of the market volatility surrounding India’s demonetisation scheme and the US elections. There are chances that QIB portion will be subscribed. We expect the issue will go through now,” said a top executive at IOB’s merchant banking division in Chennai, requesting anonymity.

BSE’s 30-stock benchmark Sensex has declined 5% since 8 November when Prime Minister Narendra Modi announced the demonetisation of higher value Rs 500 and Rs 1,000 currency notes.

A day later US voters elected Donald Trump as their new president, in a surprise development. Trump had voiced his opposition to world trade and his election has brought a new dose of uncertainty into the global economy.

GreenSignal

GreenSignal launched its three-day IPO on 9 November. On 11 November, it decided to extend the IPO by three working days till 17 November. Even then, it failed to garner any response from institutions.

As on Thursday, the non-institutional investors’ category comprising high net-worth individuals and corporate investors’ portion was oversubscribed 16%, exchange data showed.

Retail investors bid for almost nine times the shares reserved for them, buoying up the IPO.

Chennai-headquartered GreenSignal is engaged in manufacturing and development of BCG vaccines. It aimed to raise as much as Rs 116 crore initially, but is now aiming at only up to Rs 110 crore. At the lower end of the price band it would be able to raise around Rs 99 crore.

The last public issue that failed to clear the ropes was that of edible oil maker NCML Industries Ltd. The firm had called off its IPO in January 2015 due to poor response from investors even after extending the share sale period and cutting the price band.

The IPO market in India picked up pace after four years of slow activity in mid-2014 as the new BJP-led government took over.

In calendar year 2015, 21 companies raised close to Rs 14,000 crore in capital, as per stock exchange data. So far this year, 26 companies have tapped primary markets, collectively raising more than Rs 20,000 crore.

Interestingly, healthcare as a sector at large had been one of the best performers in terms of share price movement after listed. Another drugmaker to test public markets, Alkem Laboratories Ltd that went public last December is currently trading at over 60% premium to its IPO price.

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Collateral damage: GreenSignal Bio’s IPO makes another attempt to sail through

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