Subscriptions for the initial public offering (IPO) of non-banking finance company IndoStar Capital Finance Ltd neared the halfway mark on the first day of bidding on Wednesday thanks to strong demand from institutional investors.
The public issue of 22.57 million shares, excluding the anchor investorsâ portion, received bids for nearly 9.2 million shares, stock exchange data showed. The book was subscribed 41% at the end of the first day of bidding.
Institutional buyers bid for 8.3 million shares against 6.43 million shares on offer.
The retail portion, in which bids cannot exceed Rs 2 lakh, was subscribed roughly 9% of the 11.29 million shares on offer. The portion for non-institutional investors, comprising corporate bodies and high net-worth individuals (HNIs), received a handful of bids on day one.
Ahead of the offering, the Mumbai-based NBFCâbacked by private equity firm Everstone Capitalâraised Rs 553.20 crore ($82.44 million) by allotting shares to anchor investors, which include investment firms East Bridge Capital and Fidelity.
IndoStar allotted 9.67 million shares at the upper end of the Rs 570-572 price band to 24 anchor investors.
The IPO, which will close on Friday, will see promoters and co-investors make a partial exit. The offering is a combination of fresh shares as well as a secondary sale of shares.
IndoStar is seeking Rs 5,213.14 crore ($781.93 million) in valuation through the IPO. The company will issue fresh shares worth Rs 700 crore, besides a secondary sale of 20 million shares by the promoter and other shareholders.
The company had filed its draft proposal with the Securities and Exchange Board of India (SEBI) on 9 February. It received the regulatory nod to float its IPO on 3 April.
JM Financial, Kotak Mahindra Capital, Morgan Stanley India, Motilal Oswal Investment Advisors, and Nomura Financial Advisory and Securities India have been appointed as the merchant bankers for the issue.
VCCircle had first reported in November 2017 that the company was reviving plans to go public ahead of a proposed acquisition of ICICI Home Finance.
The deal to buy ICICI Bankâs mortgage unit was subsequently called off. IndoStar Capitalâs chief executive R Sridhar later explained that there was a âproblem of alignment of objectives.â
The NBFC was established in 2009 as RV Vyapaar Pvt. Ltd. It was renamed as IndoStar in 2014. The company is 90.74% owned by IndoStar Capital Mauritius as of 31 March 2017, according to a June credit report by Care Ratings.
Everstone holds a 49.4% stake in IndoStar Capital Mauritius, while Goldman Sachs owns 18.8%. Its other major shareholders are ACIP Investments with a 16.4% stake, Baer Capital Partners with 10.8% and CDIB Capital Internationalâthe PE arm of China Development Financialâwith 4.7%. One of its previous investors was Ashmore Group Plc, which sold its stake to Everstone and ACIP in 2014-15.
IndoStar had assets of Rs 5,222 crore as of March 2017 and is building on its next set of growth vectors, utilising its structured debt expertise to serve smaller businesses, according to the companyâs website.
The company operates four principal lines of business, namely corporate lending, small and medium enterprise (SME) lending, vehicle financing and housing financing.
Around 86% of its portfolio was in wholesale lending, divided almost equally between real estate and non-real estate segments. The other category includes loans against property to small and medium enterprises.
Corporate lending accounted for 78.6% of its total credit exposure for the six months ended September 2017, while its SME lending accounted for 21.4% in the same period.