Inox Wind IPO subscribed over 18x, allays concerns on state of primary market

The initial public offer of wind power solutions provider Inox Wind Ltd sailed through easily and was subscribed 18.5x the size or oversubscribed 17.5 times, data collated by exchanges show.

This is the first public issue to see bumper subscription after poor issues of two PE-backed firms Ortel Communications Ltd and Adlabs Entertainment Ltd, which raised a red flag on the appetite of investors for the primary market. With Inox Wind attracting interest, it can now be questioned if these other two companies were too aggressive in pricing their respective issues.

While Ortel's PE investor New Silk Route cut the size of its offer-for-sale to see through the IPO, in the case of Adlabs, the firm had to extend the time period of the issue and also cut the price band. Adlabs issue was fully covered on the final day and just managed to cross the finishing line in the dying hours of the extended issue.

Inox Wind manufactures wind turbine generators and provides related turnkey solutions, including wind resource assessment, site acquisition, infrastructure development, erection and commissioning, and also long-term operations and maintenance of wind power projects.

The company, which was incorporated in April 2009 and commenced operations in March 2010, is a subsidiary of Gujarat Fluorochemicals Ltd. Besides the parent, the group also has a separate listed firm under Inox Leisure Ltd.

The issue, which was managed by Axis Capital, Bank of America Merrill Lynch, Edelweiss and Yes Bank, saw full subscription from all three investor categories—institutional, HNI and corporate, and retail.

Both institutional and HNI and corporates’ portions were subscribed over 35 times while retail investors bid for twice the number of shares reserved for them.

The firm sought to raise Rs 700 crore through a fresh issue of shares besides an offer for sale by its parent Gujarat Fluorochemicals. The listed parent can pull out as much as Rs 325 crore, taking the total issue size over Rs 1,000 crore, one of the largest IPOs of this size in the recent past.

Earlier, the firm had roped in a bevy of mutual fund and foreign portfolio investors who together picked 9.42 million shares at the upper end of the price band committing Rs 306.3 crore.

Given the response to the issue, the issue price is also expected to be fixed at the upper end of the price band of Rs 315-325 a share.

For the nine months ended December 31, 2014 and the years ended March 31, 2014, 2013 and 2012, respectively, Inox Wind's revenue was Rs 1,794.97 crore, Rs 1,576.3 crore, Rs 1,063.6 crore and Rs 621.99 crore, respectively. In the same period its net profit was Rs 179.3 crore, Rs 131.46 crore, Rs 150.4 crore and Rs 99.8 crore.

Another listed firm in the same domain is Suzlon Energy Ltd, which has been under severe financial stress due to debt pile-up from large acquisitions overseas. It has sold off bulk of those assets as part of restructuring to clean its balance sheet.

In January, Suzlon inked a deal with US-based private equity firm Centerbridge Partners LP to sell its entire stake in wholly owned German firm Senvion SE (formerly REpower Systems) for up to €1.05 billion ($1.2 billion or Rs 7,560 crore).

Last month, billionaire Dilip Shanghvi and his associates, the promoters of India's top drugmaker by market value Sun Pharma, said they are investing Rs 1,800 crore ($290 million) to buy 23 per cent stake in Suzlon Energy.

Tulsi Tanti family, the current promoters of Suzlon, will hold 24 per cent stake and will retain management control.

(Edited by Joby Puthuparampil Johnson)

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