The initial public offering of Angel Broking Ltd crossed the three-fourth mark on the first day on Tuesday led by bids from retail investors.
The public offering of 13.77 million shares, excluding the anchor allotment, was subscribed 76.26% after receiving bids for 10.5 million shares, stock-exchange data showed.
The quota of shares reserved for retail investors was covered nearly 1.46 times. Non-institutional investors such as corporate houses and affluent individuals placed orders for about 16% of the shares reserved for them. Institutional investors did not bid for a single share, the data showed.
The IPO of Angel Broking, which is backed by World Bank arm International Finance Corporation (IFC), will close on Thursday.
On Monday, Angel Broking raised Rs 180 crore ($24.51 million at current exchange rates) from a bunch of anchor investors including a domestic private equity firm.
The securities broking company allotted a little over 5.88 million shares at the upper band of the Rs 305-306 per share price band to 12 institutional investors, a stock-exchange filing showed.
IIFL’s Special Opportunities Fund (Series 5), a private equity-style fund that typically makes public market or pre-IPO bets, bought shares worth Rs 9 crore.
India-focussed funds of Goldman Sachs (Rs 20 crore), Macquarie (Rs 11 crore) and Invesco (Rs 11 crore) were among the foreign institutional investors that subscribed to Angel Broking shares in the anchor allotment.
Anchor investors, also known as cornerstone investors, are institutions that accept a one-month lock-in for a sizable allocation of shares. Their participation highlights investors’ confidence in an IPO and sets a benchmark for the investor community at large.
Indian asset managers that acquired Angel Broking’s shares were ICICI Prudential Mutual Fund, HDFC Mutual Fund, Aditya Birla Sun Life Mutual Fund, Sundaram Mutual Fund and Nippon India Mutual Fund.
Bajaj Allianz Life Insurance Co. and Max Life Insurance were the Indian insurance firms that participated in the anchor allotment.
Angel Broking’s IPO closes Thursday. It is seeking a valuation of Rs 2,500 crore ($340 million) from the IPO.
The IPO comprises a fresh issue of shares worth Rs 300 crore and a secondary market sale of nearly 9.81 million shares. At the upper end of the price band, the secondary sale will be worth Rs 300 crore. The offer will result in roughly 24% stake dilution on a post-issue basis.
Promoters Ashok D. Thakkar and Sunita Magnani are selling a portion of their holding. Some individual shareholders, including members of the Thakkar family, as well as International Finance Corporation (IFC) are also selling shares.
IFC will sell about 3.92 million shares out of 12.927 million shares (17.95% stake pre-IPO) for Rs 120 crore. Its post-IPO holding will be about 9 million shares (11.01% stake) after factoring the fresh issue of shares in the IPO.
IFC had picked up a 12.5% stake in Angel Broking in 2007 for Rs 150 crore. The deal valued Angel Broking at Rs 1,200 crore then. Angel Broking used the funds for branch expansion and starting insurance distribution, according to a 2007 Mint report. IFC’s stake increased to 17.95% stake after a bonus issue in March 2018, according to the company’s prospectus.
A successful IPO will see Angel Broking join listed peers such as Edelweiss Financial Services Ltd, Motilal Oswal Financial Services, JM Financial Holdings, IIFL Holdings Ltd, Centrum Capital and Emkay Global Financial Services Ltd.
VCCircle had first reported in April 2018 about Angel Broking’s IPO plans and shortlisting of merchant bankers.
The securities firm will use Rs 230 crore out of the fresh net proceeds to meet its working capital requirements, besides using an undisclosed amount for general corporate purposes. The proceeds from the secondary market sale will go to the selling shareholders.
ICICI Securities, Edelweiss Financial Services, and SBI Capital Markets are the merchant bankers managing the IPO.
Angel Broking was established by Dinesh Thakkar in 1987 as a stock broking firm before being incorporated as a financial services company in 1997.
The firm offers equity and commodity broking services besides providing currency trading services, wealth management, and portfolio management among a host of financial markets solutions.
The Mumbai-based company operates through nearly 11,000 sub-brokers across 110 branches in 1,800 cities and towns in India. It caters to over 11 lakh active clients.