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L&T Technology IPO covered 70% with one day to go; GNA Axles subscribed 64% on day 1

14 September, 2016

The initial public offering (IPO) of L&T Technology Services Ltd that got off to a slow start with just under a fifth of the issue covered at the end of day 1, saw some activity on the second day. Around 70% of the issue was covered on the penultimate day, led by institutional shareholders, stock exchange data shows.

The research unit of Larsen & Toubro Ltd (L&T), India’s biggest engineering firm, saw institutional investors fully subscribing to their portion of the issue while retail investors’ portion was covered around 77%. Corporates and high net-worth individuals continued to play the wait-and-watch game, bidding for just around 3% of the issue reserved for them.

Last Friday, L&T Technology raised Rs 268.32 crore ($40 million) from anchor investors including mutual funds and foreign portfolio investors at the upper end of the Rs 850-860 a share price band.

The firm is seeking a valuation of as much as Rs 8,745 crore ($1.3 billion) in the issue where L&T is selling 1.04 crore shares, or a 10.2% stake.

L&T Technology will be the fourth group firm to list on stock exchanges. Parent L&T has been a public firm for decades while the group’s financial services arm, L&T Finance Holdings Ltd, floated its IPO five years ago.

In July, another Larsen unit, L&T Infotech Ltd floated its IPO. The public issue of the software services unit was covered 11 times but it made a tepid debut on its listing day and has fallen further since then.

L&T Technology offers R&D solutions for industries such as industrial products, transportation, aerospace and telecom. It also offers services in areas such as mechanical engineering, embedded systems, besides proprietary solutions in engineering data analytics, and the Internet of Things (IoT). 

The company was set up in January 2014 by carving out the product engineering services segment from L&T Infotech. The integrated engineering business from L&T was then transferred to the new entity in April 2014.

The issue is being managed by JM Financial, Kotak Investment Bank, Bank of America Merrill Lynch and SBI Capital Markets.

GNA Axles

Another IPO that opened to the public today is for rear axle shafts maker GNA Axles Ltd. The firm that raised Rs 37.8 crore from a string of mutual funds run by Reliance Capital, HDFC and UTI, saw investors bidding for 64% of the total issue on the first day.

Corporates and HNIs oversubscribed their portion of the issue while retail investors bid for two-thirds of the shares reserved for them. It did not attract any institutional investor interest on the first day.

The issue is being managed by PNB Investment Services Ltd and Ambit Pvt Ltd.

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L&T Technology IPO covered 70% with one day to go; GNA Axles subscribed 64% on day 1

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