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Mazagon Dock’s IPO covered 7.5 times, UTI AMC crosses three-fourths mark on day two
Photo Credit: VCCircle

The initial public offering (IPO) of state-run warship maker Mazagon Dock Shipbuilders Ltd received strong investor interest across all categories on the second day on Wednesday, while UTI AMC’s public offer crossed the three-fourths mark.

Mazagon Dock’s public offering of nearly 30.6 million shares received bids for 230.11 million shares at the end of day two, stock exchange data showed. The book was subscribed 7.52 times.

The quota of shares reserved for retail investors was covered 15.53 times. Non-institutional investors such as corporate houses and affluent individuals subscribed nearly five times the shares reserved for them.

Institutional investors bid for 2.82 times the shares reserved for them, the data showed.

The IPO started on a strong note on the first day on Tuesday, with the book covered nearly 2.1 times.

Mazagon Dock’s IPO, which is part of the government’s disinvestment programme, will close on Thursday. The company is seeking a valuation of as much as Rs 2,924.5 crore ($396 million).

The government is selling a 15.17% stake in the Mumbai-based company which isn’t issuing any new shares.

The company has set a price band of Rs 135-145 per share for the IPO. At the upper end, the government will mop up Rs 444 crore.

Mazagon Dock, which is fully owned by the government of India, is the first state-run company to go public in the financial year that began in April.

As part of the disinvestment programme, the government has sold part of its stake in two other listed companies this fiscal year so far—Hindustan Aeronautics Ltd and Bharat Dynamics Ltd—raising a total of almost Rs 5,696 crore.

In February, the government had set an ambitious target to raise Rs 2.1 trillion ($28.4 billion) from asset sales in 2019-20. It has so far met less than 3% of the goal.

A successful IPO and listing will see Mazagon Dock join listed peers such as state-run Cochin Shipyard Ltd, which went public in August 2017, and Garden Reach Shipbuilders & Engineers Ltd.

Mazagon Dock had received regulatory nod for its IPO in December last year.

This was the second time Mazagon Dock had filed its IPO proposal.

It had previously planned a share sale in 2018, when the government wanted to sell a 10% stake in the company.

Yes Securities (India) Ltd, Axis Capital Ltd, Edelweiss Financial Services Ltd, JM Financial Ltd and DAM Capital Advisors Ltd (earlier known as IDFC Securities Ltd) are the merchant bankers managing the IPO.

Mazagon Dock has a long history. It operated as a small dry dock in Mazagaon village in Mumbai to service the ships of the British East India Company in 1774. The dock was then developed into a ship repair yard and later a ship-building yard over the course of two centuries.

The company was incorporated as a private firm in 1934, and was acquired by the government in 1960 to expand its warship development programme. Since 1960, it has built 795 vessels.

Mazagon Dock constructs and repairs warships and submarines for use by the Indian Navy and commercial clients. It is India’s only shipyard to have built destroyers and conventional submarines for the Indian Navy, besides being one of the initial shipyards to manufacture corvettes (or small warships).

The company operates two verticals: One builds and repairs naval ships, and the second builds and repairs diesel electric submarines, among others.

UTI AMC

UTI AMC’s IPO of 27.35 million shares received bids for 21.544 million shares at the end of day two, stock exchange data showed. The book was subscribed 78.77%.

The quota of shares reserved for retail investors was covered nearly 1.15 times. Non-institutional investors such as corporate houses and affluent individuals placed bids for nearly 35% of the shares reserved for them.

The portion of shares reserved for institutional investors was covered 48%, data showed.

The IPO will also close on Thursday.

On Monday, the company raised Rs 644.64 crore ($87.3 million) from a bunch of anchor investors by allotting 11.636 million shares at Rs 554 apiece to them.

UTI AMC has set the price band for its IPO in the range of Rs 552-554 per share. The IPO comprises share sales by Life Insurance Corp., state-run lenders State Bank of India, Bank of Baroda and Punjab National Bank, and US-based asset management firm T Rowe Price. The selling shareholders will raise a total of Rs 2,152-2,160 crore in the IPO.

UTI AMC will be the third fund house to be listed on the bourses, after HDFC Asset Management Co. and Nippon Life India Asset Management Ltd. HDFC AMC went public in 2018 and Nippon India Mutual Fund the year before.

The company is India’s second-largest asset manager, behind SBI Mutual Fund, after taking into account the money it manages under mutual funds, pension funds, alternative investment funds, the national pension scheme and the assets of the Employees’ Provident Fund Organisation.

However, in terms of quarterly average mutual fund assets under management, it is the eighth-largest.

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