Edible oil firm NCML Industries Ltd has become the first casualty in the primary market having been forced to withdraw its ongoing initial public offer (IPO) after poor response. The firm had previously extended the time period for the issue and also cut the price band to attract investors.
The firm had reserved bulk of the issue for retail investors but failed to woo them even as institutional and HNIs & corporate investors almost subscribed to their full portion as of the penultimate day.
The firm had opened its issue on December 29 to sell 6 million shares in the price band of Rs 100-120 a share, eyeing up to Rs 72 crore. It was to close the issue on January 2, 2015.
However, with the issue drawing almost zilch, it cut the price band to Rs 80-90 a share and extended the issue period by a week. The IPO, which could have fetched it up to Rs 54 crore, was scheduled to close on January 9.
However, the issue was covered just 45 per cent as of January 8, post which the firm decided to scrap the IPO.
Institutional investors’ portion was fully covered while HNI & corporate investors had bid for 91 per cent of the portion reserved for them. But retail investors portion was subscribed just 16 per cent or a sixth of their quota sinking the IPO.
NCML, which sells edible oil under brands like Maanik besides Moti and Shan, had come with an offer for sale issue from its promoters.
Corporate Strategic Allianz Limited was the book running lead manager to the issue.
This marks the first failed IPO after the primary market opened up with new government taking over. The new government in the centre had led to what analysts term the beginning of a new long term bull market and has buoyed the benchmark indices by almost a quarter.
NCML was also one of the few firms not backed by a PE firm to test the public market. Earlier, Shemaroo Entertainment, another non PE-backed firm, had managed to see through its issue comfortably.
The two previous issues of PE-backed firms Sharda CropChem and Snowman Logistics saw bumper IPOs and both were oversubscribed 59x at the end of their issues. Comparatively, the last successful IPO of Monte Carlo, another PE-backed firm, had seen tepid response even though it finally closed with almost 7x oversubscription.
Buoyant primary market is crucial for both PE firms looking at liquidity from their past investments as also for firms looking at new source of capital as lending rates remain high.
Several PE-backed firms are in the queue to float their shares in the public market.
(Edited by Joby Puthuparampil Johnson)