Drugmaker Eris Lifesciences Ltd made a tepid debut on the stock exchanges on Thursday with its shares closing in the red after listing at a slight premium.
Shares of the Ahmedabad-based company began trading at Rs 612 apiece on the BSE, compared with the initial public offering price of Rs 603. The shares rose to a high of Rs 627 before ending at Rs 601.05 apiece. The Sensex closed flat after gaining as much as 0.7% earlier in the day.
The company’s IPO was covered 3.3 times last week but failed to garner participation from non-institutional investors, including affluent individuals and corporate houses.
Eris is the 10th company to list on the stock exchanges this year. Six of the previous nine companies gained on their market debut while Tejas Networks Ltd listed at its issue price.
Avenue Supermarts Ltd, which operates hypermarket chain D-Mart, made the best debut so far this year with its shares listing at twice the issue price of Rs 299 apiece.
Stock-exchange operator BSE Ltd also had a positive start as its shares rose 33% on listing. Among the laggards, Gaja Capital-backed CL Educate Ltd made a disappointing debut in March with its shares listing at a steep discount.
The offering comprised a share sale by founders and other shareholders, including ChrysCapital. The PE firm sold its entire 16.25% stake through the IPO and got around 75% of the proceeds that total around Rs 1,741 crore ($269 million).
The PE firm reaped a bountiful harvest from its almost six-year-old investment by taking home Rs 1,360 crore with 6.9 times return on its Rs 195 crore investment in September 2011. It translates into an internal rate of return (IRR) of 39% in rupee terms, as per VCCircle estimates. Private equity firms typically chase an IRR of 20-30% in India.
While ChrysCapital has exited, the drugmaker attracted a bunch of marquee anchor investors ahead of the IPO. These include Abu Dhabi Investment Authority, a sovereign wealth fund owned by the United Arab Emirates, as well as Boston-based investment firm Eaton Vance Management, Morgan Stanley and Goldman Sachs.
Eris was founded in 2007 by Amit Bakshi, a sales professional-turned-entrepreneur. Bakshi held a 39.97% stake before the IPO and sold a 0.5% stake. Other shareholders that sold Eris’ shares include Rakesh Shah, Rajendra Patel, Kausal Shah and Inderjeet Negi.
Eris had filed its draft red herring prospectus on 8 February. It received approval for its IPO from the Securities and Exchange Board of India on 8 May.
Axis Capital, Citibank and Credit Suisse managed the IPO.
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