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D-Mart IPO subscribed 105 times on final day

10 March, 2017

Avenue Supermarts Ltd, which runs hypermarkets under the D-Mart brand, received humongous investor turnout on the final day of its initial public offering on Friday.

The offering of 44.37 million shares received bids for 4.64 billion shares, or 105 times the size, at closing, stock-exchange data showed. This converts into bids worth Rs 1.38 trillion.

The D-Mart IPO is the most successful offering in India since Bengaluru-based business service provider Quess Corp Ltd’s share sale last year, which was covered 144.5 times.

“The D-Mart issue has seen a very high conversion of foreign investors that management met on the roadshows and also received a very strong response from retail investors,” said V Jayasankar, senior executive director and head of equity capital markets at Kotak Mahindra Capital Co. Ltd, the sole global co-ordinator and book running lead manager.

The retail investors’ book was subscribed 7.2 times and the quota of shares reserved for institutional buyers was subscribed over 144 times. The portion set aside for non-institutional investors such as corporate houses and wealthy individuals was covered about 277.74 times.

The IPO was subscribed 5.7 times at the end of day two on Thursday, after seeing record demand on day one.

Two people familiar with the D-Mart IPO said the issue has seen a conversion rate of about 90% compared with an average 50-60% conversion that IPOs see from investor roadshows.

The issue received more than 18 lakh applications and the number is estimated to reach about 20 lakh at close of bid counting.

The IPO of state-run miner Coal India Ltd, the largest initial share sale by value (Rs 15,200 crore), had received a little more than 16 lakh applications about seven years ago.

On Tuesday, the hypermarket chain founded by ace investor Radhakishan Damani raised Rs 561 crore ($84 million) by selling shares at the upper end of its price band of Rs 295-299 apiece to anchor investors including private equity firm General Atlantic, Singapore’s sovereign wealth fund GIC Pte Ltd and Capital Group, which is among world’s oldest and largest investment firms.

The company is seeking a valuation of as much as Rs 18,660 crore ($2.8 billion). At that valuation, the company would surpass the combined $2.5 billion market capitalisation of four of its well-known peers—Shoppers Stop Ltd, V-Mart Retail Ltd, V2 Retail Ltd and Future Retail Ltd.

Including the anchor portion, the IPO comprises a fresh issue of shares worth Rs 1,870 crore ($280 million). Avenue Supermarts will use almost 20% of the net proceeds to repay debt and a part of it to open new stores.

Two grey market dealers told VCCircle that the premium on the company’s shares on Friday surged to Rs 250-260 per share over its price band compared with Rs 235-240 per share seen for the past few days. The grey market is an over-the-counter market where shares are traded before they are listed on a stock exchange.

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D-Mart IPO subscribed 105 times on final day

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