The initial public offering (IPO) of Security and Intelligence Services (India) Ltd, which is backed by private equity firm CX Partners, crossed the one-third mark on the first day on Monday led by retail investors.
The public offering of 5.31 million shares, excluding anchor allotment, received bids for 1.81 million shares, or 34% of the total shares on offer, stock exchange data showed.
The retail investor’s portion was covered a shade more than two times, while the quota for non-institutional investors, comprising high net-worth individuals and corporate clients, saw bids for a handful of shares. Institutional investors did not see any bids on day one.
On Friday, the Patna-based security services provider had raised Rs 350.81 crore ($54.7 million) via a share sale to anchor investors, ahead of its three-day public offering, which opened on Monday.
Sovereign wealth fund Abu Dhabi Investment Authority led the anchor allotment by acquiring close to 16% of the shares on offer, while Deutsche Bank International and BNP Paribas also bet on the private security services firm.
Amundi Asset Management, Ashburton Investments, Altera Absolute Investments and Malabar Investments were some of the other foreign investors that took part in the anchor allotment.
Anchor investors are institutional investors who accept a one-month lock-in for a sizeable allocation of shares. Their participation highlights investors’ confidence in an IPO and sets a benchmark for the investor community at large.
The company is seeking a valuation of Rs 5,960 crore through the IPO. The public offering will comprise a fresh issue of 4.44 million shares worth Rs 362.25 crore (at the upper end of the price band), besides sale of 51.2 million shares worth Rs 417 crore by promoters and CX Partners. Of the total 51.2 million shares to be sold via the secondary route, CX is selling 3.4 million shares.
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. CX Partners will sell 4.75% stake in the company and hold about 9.81% following the issue.
Security and Intelligence Services, 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.
The proposed IPO was to comprise a fresh issue to raise Rs 362.25 crore and an offer-for-sale by CX Partners, promoters and other shareholders. However, the Securities and Exchange Board of India had kept the IPO proposal in abeyance till violations under the Companies Act, 1956, were resolved. The company had earlier issued shares to more than 49 people through private placement, above the limit stipulated by the Companies Act.
In January, VCCircle had reported that Security and Intelligence Services had addressed the problems related to regulatory violations following concerns raised by SEBI.
It will be India’s first security services firm to go public, and its IPO will be keenly watched by other private equity-backed peers such as Tops Security Ltd.
Apart from security services, the company also offers cash logistics services to banks, home-alarm monitoring and response services, besides facility management services to corporate clients. It has a network of 229 branches and employs 1.36 lakh personnel across India. It also operates in Australia.
Axis Capital, ICICI Securities, IIFL, Kotak Mahindra Capital, SBI Capital, Yes Securities and IDBI Capital are managing the issue.