Standard Chartered PE-backed engineering firm Innoventive Industries Ltd just managed to see through its maiden public issue with 1.2x subscription, primarily backed by high networth investors (HNIs) and corporate investors.
The issue that was closed for QIB portion on Thursday, saw poor participation from the institutional investors, especially foreign institutional investors. QIB portion was subscribed just 85 per cent. But both retail and HNIs oversubscribed their portion to make up.
Given a not-so-great response from the institutional investors and, at best, an average participation from HNIs themselves, the company may face some resistance to its stock movement upwards in its debut. This can also affect the potential unrealised gains of private equity investors in the company.
Standard Chartered PE is eyeing unrealised gain of up to 9 per cent at the issue price band. It had picked 10.14 per cent stake in the Pune-based company through a mix of share purchase from non-promoters, besides a fresh issue of shares, two months ago. The fresh issue was at Rs 117, which is the lower end of the price band, but the share purchased from promoters was at a discount to this price that brings down the investor’s cost of purchase even at the pre-IPO level.
In total, Standard Chartered PE picked the stake through two funds for Rs 46 crore or just over $10 million.
Another private equity investor Lighthouse Funds would be sitting on unrealised gains of around 88-93 per cent on its investments. Kavos Capital, a special purpose vehicle set up by India 2020 Ltd (a private equity fund sponsored by Lighthouse Funds), had originally invested Rs 15 crore in June, 2008, and was allotted fresh shares last July under a bonus issue in which other shareholders or essentially the promoters gave up their right to subscribe to new shares.
Kavos brought in additional Rs 35 crore through a preferential allotment in August and its total holding of around 8 million shares representing 19.58 per cent has the average cost of purchase pegged at Rs 62.2 per share.
Innoventive raised around Rs 220 crore through the public issue that will be used for capacity expansion (Rs 163 crore) and repaying term loan (Rs 50 crore).
The company is into the manufacturing and sale of precision steel tubes, tubular components, auto components, machined components and other steel products which find application in diverse industrial sectors such as transportation, oil & gas, power, farm equipment and general engineering. It has six manufacturing facilities, located across Pune and Silvassa.
It is promoted by first-generation technocrats who acquired the company in 2002. Its key customers include Bajaj Auto, Bhel, Thermax, John Deere India, Gabriel India Ltd and Alstom Projects Ltd.
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