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Everstone-backed IndoStar Capital’s IPO sails through on final day
Photo Credit: Shah Junaid/VCCircle

Everstone Capital-backed non-banking financial company IndoStar Capital Finance Ltd saw a strong turnout for its initial public offering (IPO) in the hours leading up to the close of the issue on Friday.

The offer comprising 22.57 million shares, excluding the allotment to anchor investors, received bids for nearly 152.5 million shares, stock exchange data showed. The book was subscribed 6.75 times at the close of bidding on the third and final day.

Institutional buyers bid for 103.49 million shares, receiving a little over 16 times demand against 6.43 million shares on offer.

The retail portion, in which bids cannot exceed Rs 2 lakh, was subscribed roughly 1.37 times. The number of shares reserved for the category was 11.29 million.

The portion for non-institutional investors, comprising corporate bodies and high net-worth individuals (HNIs), witnssed massive demand as the issue approached its end.

The category, which had received roughly 30% bids till late afternoon on Friday, closed with about seven times demand for shares on offer. The issue had sailed through earlier on Friday.

At the end of day one on Wednesday, the IPO was subscribed 41%. It picked pace, with the issue receiving 69% bids on the second day.

Ahead of the offering, the Mumbai-based firm raised Rs 553.2 crore ($82.44 million) by allotting shares to anchor investors, which include 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 will see promoters and co-investors make partial exits. 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 merchant bankers for the issue.

IndoStar had in 2016 deferred its plan to go public as it was looking to expand its consumer lending portfolio through acquisitions.

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 Bank’s mortgage unit was called off. IndoStar Capital’s chief executive R Sridhar later explained that there was a “problem of alignment of objectives.”

IndoStar Capital

The firm was established in 2009 as RV Vyapaar Pvt. Ltd. It was renamed as IndoStar in 2014. The company was 90.74% owned by IndoStar Capital Mauritius as of 31 March 2017, according to a June report by Care Ratings.

Everstone Capital holds 49.4% stake in IndoStar Capital Mauritius, while Goldman Sachs owns 18.8% holding. Its other major shareholders are ACIP Investments with a 16.4% stake, Baer Capital Partners with 10.8% and CDIB Capital International—the private equity arm of China Development Financial—with 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 company’s 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 SME lending accounted for 21.4% for the same period.

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