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Mahindra Holidays Issue Subscribed 20% On Day One

24 June, 2009

The first day of Mahindra Holidays initial public offer (IPO), which opened on June 23, Tuesday, was devoid of any fireworks. The issue got subscribed only 20 per cent on the first day of its issue with most of the bids coming in from institutional investors.

The issue received bids for 1.87 million shares, representing 0.20 times of the shares on offer, as per data available with the National Stock Exchange. 

There is no cause for worry, though. Given the interest from qualified institutional buyers (QIB),  by the time the issue closes on June 26 (Friday), it may be fully subscribed.

Given that most of the bids are coming at the lower end of the price band (Rs 275-325), the hospitality firm could end up mopping close to Rs 250 crore, about Rs 50 crore less than what it could have raised had the bids come at the upper end of the band.

The largest IPO in 12 months has been subscribed 0.2 times or one fifth of the issue has found takers on day 1. The first day applications shows that QIBs were the most active investors with one third of the issue portion reserved for QIBs seeing bids.

Interest among other investors was much lower with non institutional investors bidding for just 1% of what was reserved for them and retail investors bidding for less than 3% of their portion.

For pre IPO investors, the bid price comes as a bad news. SBI and Jacob Balas who had invested at a price of Rs 479/share in January 2008 would see a haircut of 42% in the value of their investment if the final issue price is set at Rs 275.


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Mahindra Holidays Issue Subscribed 20% On Day One

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