Equitas Holdings IPO covered 38% on day 2

The initial public offering of Chennai-based Equitas Holdings Ltd, the holding firm for the fifth-largest microlender in the country, barely managed to cross the one-third mark on the second day.

The issue, which began on a slow note on Tuesday with subscriptions touching only 9 per cent, was covered just under 38 per cent on Wednesday.

Subscription continues to be led by retail investors, who bid for about 59 per cent of their portion of the issue. Non-institutional investors bid for just around 3.5 per cent of the quota reserved for them. Qualified institutional buyers, who mostly stayed away on day 1, subscribed over a quarter of their portion, stock-exchange data show.

It is not unusual for IPOs to get fully covered on the final day of the three-day period; indeed, most issues get completely subscribed on the last day. However, the performance of Equitas in the first two days does not show major investor interest. That too for a firm which is one of the few chosen to get a small finance bank licence and counts several PE investors as shareholders.

Ahead of the IPO, the company raised Rs 653 crore from 16 anchor investors by allotting 5.93 crore shares at Rs 110 each, the upper end of the price band.

Anchor investors include Wipro chairman Azim Premji's private investment arm PremjiInvest. A host of mutual funds and insurance firms including Franklin Templeton MF, Birla Sun Life Trustee Co, SBI MF, UTI MF, ICICI Prudential MF, Kotak Mahindra MF, HDFC Standard Life Insurance, Birla Sun Life Insurance, Sundaram MF, Tata AIA Life Insurance, Reliance Life Insurance and Ambit Alpha Fund were the other anchor investors.

Equitas had earlier changed the terms of its IPO. The firm is seeking to become the second microlender to go public after SKS Microfinance listed on the bourses in 2010.

The firm is looking to raise as much as Rs 720 crore through a fresh issue of shares besides an offer for sale by a bunch of its private investors and founder PN Vasudevan. In its draft prospectus filed with capital markets regulator SEBI last October, Equitas had sought to raise up to Rs 600 crore.

Of the total money to be raised through the fresh issue of shares, the company plans to use over Rs 600 crore towards investment in subsidiaries to augment their capital base.

Equitas is essentially a holding company and operates through three subsidiaries. The units are engaged in microfinance lending and also offer mortgage loans, vehicle loans and loans to micro and small enterprises.

Edelweiss, ICICI Securities, Axis Capital and HSBC are the merchant bankers for the IPO.

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