Mahanagar Gas IPO oversubscribed 63 times
Mahanagar Gas

Gas distributor Mahanagar Gas Ltd attracted a deluge of investors on Thursday as it wrapped up its initial public offering (IPO) with oversubscription of 63 times the number of shares on sale.

The sole gas distribution firm in Mumbai saw institutional investors bid for 72 times the number of shares reserved for them while high net-worth individuals and companies bid for as much as 191 times their portion. Retail investors bid for six times their quota, stock-exchange data show.

The company is a joint venture of state-run GAIL India Ltd and BG Group, now part of Royal Dutch Shell Plc. The IPO, which was fully covered on the first day itself, is entirely an offer for sale of 12.3 million shares each by GAIL and BG.

Given the oversubscription, the issue is likely to be priced at the upper end of the Rs 380-421 a share price band. This would mean an issue worth Rs 1,040 crore. This includes the Rs 309 crore it raised from anchors investors ahead of the IPO.

Mahanagar Gas is the 12th firm to see through its IPO amid volatility in the stock market early this year due to concerns of bad loans of state-run banks and the slow pace of economic reform. Although the banking sector’s problem continues to rile investors and many analysts take India's claim of being the fastest-growing major economy with a pinch of salt, the government has been trying to rekindle its reforms push.

Earlier, this week it unveiled a major push to bring more foreign investments into the country by easing FDI norms in several sectors. There have been positive developments related to the long-pending goods and service tax legislation as well, though some opposition remains.

While a number of firms have decided to put their IPO plans on the back burner, some are still on track to go public. The positive response to the Mahanagar Gas IPO strikes the right chords for the primary market. This also comes at a time when the secondary market has once again risen from the recent lows and is now just 10% short of its all-time highs.

In April this year, Thyrocare Technologies Ltd's IPO was oversubscribed 72.26 times. This was the second best show for an IPO in eight years. In April 2015, goods and passenger transport services provider VRL Logistics Ltd's public float was oversubscribed over 73 times, beating Reliance Power's issue in February 2008.

Reliance Power’s IPO, which saw bids worth Rs 7.5 lakh crore against the issue size of Rs 11,560 crore, was oversubscribed within a minute of opening. In January 2008,  the public float of Kishore Biyani-led Future group’s financial services arm Future Capital Holdings was subscribed over 132 times, setting an all-time record.

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