GreenSignal Bio Pharma Ltd saw some traction from institutional investors on its penultimate day after it cut the issue price band and stretched the time period of the initial public offering (IPO) twice.
The qualified institutional buyers’ (QIB) category saw investors bidding for 21% of shares reserved for them, stock exchange data showed.
“Seeing foreign institutions subscribe to the issue gives us confidence at a time foreign institutions have been net sellers in equity and debt markets since the demonetisation programme was announced,” said an executive at Indian Overseas Bank (IOB) merchant banking division, on the condition of anonymity.
Foreign portfolio investors (FPIs) have pulled out Rs 2,777.94 crore (a little more than $410 million) from the equity cash segment in the last two weeks, as per data collated by stock exchanges.
In the same period, the BSE’s 30-stock benchmark Sensex has declined 6.61% after Prime Minister Narendra Modi announced the demonetisation of higher value Rs 500 and Rs 1,000 currency notes.
“We are keeping our fingers crossed. Both the company as well as the merchant banker are making all efforts to get the requisite bids and the issue to succeed. We have approached banks and mutual funds,” said another IOB official, requesting anonymity.
IOB is the sole financial advisor to GreenSignal’s IPO.
GreenSingal needs full subscription in the institutional category for the issue to succeed, as stipulated under capital market regulations.
The Chennai-headquartered tuberculosis vaccine manufacturing company has reserved as much as 75% of the issue for QIBs. As per the regulations, “Wherein at least 75% of the net issue shall be allotted on a proportionate basis to qualified institutional buyers (QIBs) (the ‘QIB portion’)… If at least 75% of the net issue cannot be allotted to QIBs, then the entire application money shall be refunded forthwith.”
While institutions were seen queuing in small numbers, retail individual investors and non-institutional investors’ category comprising high net-worth individuals (HNIs) cancelled their applications as the IPO period was extended, exchange data showed.
Retail category saw its overall bid size reduce to 8.58 times compared with 8.83 times on Friday and 8.91 times a day prior.
Bids in the non-institutional category reduced to 0.13 times their portion or was covered just 13% compared with 16% last week.
On Thursday, the firm that had already pushed the closure of its IPO previously, had once again extended the time period by three more days. Simultaneously it pruned the price band hoping to attract institutional investors.
The public issue will now close on November 22 and will run with a revised price band of Rs 68-76 per share compared with the original Rs 76-80 per share.
Although, the overall issue was fully covered at the end of the extended six-day issue period on Thursday, the firm did not manage to attract even a single bid by QIBs.
GreenSignal is engaged in manufacturing and development of BCG vaccines. It aimed to raise as much as Rs 116 crore initially, but is now aiming at only up to Rs 110 crore. At the lower end of the price band it would be able to raise around Rs 99 crore.
The last public issue that failed to clear the ropes was that of edible oil maker NCML Industries Ltd. The firm had called off its IPO in January 2015 due to poor response from investors even after extending the share sale period and cutting the price band.
The IPO market in India picked up pace after four years of slow activity in mid-2014 as the new BJP-led government took over.
In calendar year 2015, 21 companies raised close to Rs 14,000 crore in capital, as per stock exchange data. So far this year, 26 companies have tapped primary markets, collectively raising more than Rs 20,000 crore.
Interestingly, healthcare as a sector at large had been one of the best performers in terms of share price movement after listed. Another drugmaker to test public markets, Alkem Laboratories Ltd that went public last December is currently trading at over 60% premium to its IPO price.
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