State-run telecommunications equipment maker ITI Ltd didn’t receive any substantial bids for its shares in its follow-on public offering even after reducing the price and extending the duration of the sale.
The government, which is looking to raise about Rs 1,400 crore through the offer, revised the price band from Rs 72-77 to Rs 71-77 after seeing a muted response from public investors. The issue, which was slated to close on Tuesday, was extended by three days to Friday.
The offering has been subscribed 48.75% thus far after receiving bids for 88.64 million shares against the 181.8 million shares on sale, according to stock-exchange data.
The retail investors’ quota was subscribed nearly 94% while the portion set aside for institutional buyers was subscribed 49%.
The government needs at least 75% subscription of the institutional buyers’ portion or a 90% total subscription for the offer to succeed. If the government is unable to garner sufficient bids, it would have to refund money for the bids already made.
Non-institutional investors, comprising corporate bodies and affluent individuals, have bid for nearly 16% of the shares reserved for them so far. The employees’ portion has received bids for 70% of the shares reserved for them.
BOB Capital Markets, Karvy Investor Services, and PNB Investment Services are merchant bankers managing the FPO.
ITI’s offer would have helped the company utilise Rs 642 crore towards funding its working capital requirement and Rs 607 crore towards repayment of its loans besides an undisclosed amount towards general corporate purposes.
ITI has reworked its business operations on the path to profitability from sustained losses. The Cabinet Committee of Economic Affairs (CCEA) had approved a revival plan in 2014. The company reported a positive net-worth after a gap of 16 years, according to its press statement ahead of the FPO.
The company has aligned its operations according to market demand, providing end-to-end turnkey solutions, diversifying into new areas like 5G, cloud computing, artificial intelligence (AI), monetizing its large pool of real estate assets for continuous revenue generation.
The company has an order book of Rs 11,051 crore. Nearly one-third comprises of large turnkey projects, while 57.87% comprises annual maintenance contracts (AMCs).