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Ortel IPO subscribed just 30% at end of Day 2

Regional cable TV and broadband distribution firm Ortel Communications Ltd has seen under a third of its initial public offer (IPO) covered at the end of the second day of the public issue. Although many investors, especially HNIs, are known to come in on the last day, the issue does not seem to have generated a lot of interest among investors, which sends a bad signal for the primary market.

This is the first public issue to test the investor's appetite for primary market this year. At the fag-end of last year, edible oil firm NCML's issue was withdrawn after it failed to attract investors. Monte Carlo Fashions was the last one to clear the rope three months ago.

Exchange data show the issue has not seen a single application by HNI or corporate investors while institutional buyers have covered around 42 per cent of the issue reserved for them and retail investors have bid for 8 per cent of their portion as of end of day 2.

The issue had a slow start to begin with and saw 15 per cent of the issue covered on the first day with institutional investors leading the show.

Earlier, the firm roped in Axis Mutual Fund and ICICI Prudential Insurance as anchor investors in the IPO. The two investors have picked 2.55 million shares for Rs 46.2 crore ($7.5 million). While Axis Mutual Fund has picked 0.9 million shares for Rs 16.3 crore, ICICI Prudential Insurance brought in the remaining amount. They bought the shares at the lower end of the price band of Rs 181-200 a share.

The firm is eyeing to raise up to Rs 120 crore through fresh issue of shares besides an offer for sale by its existing investor, private equity firm New Silk Route (NSR), which would separately fetch it Rs 108.6-120 crore.

NSR, which was initially looking to part exit but had offered to sell its entire holding when Ortel filed its draft red herring prospectus (DRHP) last September, has now again changed its plan. It has now offered to sell around three-fourth of its holding as part of the offer for sale.

Ortel had previously looked at a public float around five years ago, when NSR was looking to exit completely. However, it did not go ahead with the IPO due to poor market conditions. In 2013 it had re-filed its documents but later withdrew it.

Kotak Mahindra Capital is managing the issue.

(Edited by Joby Puthuparampil Johnson)

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