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PE-backed Dixon Tech’s IPO subscribed four times on day 2; BRNL covered 70%

07 September, 2017

The initial public offering of contract electronics manufacturer Dixon Technologies Ltd was subscribed over four times on the second day on Thursday driven by strong demand from retail and institutional investors.

The public offering of 2.37 million shares, excluding the anchor allotment, received bids for a little over 10.10 million shares at the end of day two, stock-exchange data showed. The book was subscribed 4.25 times.

The qualified institutional buyers’ category was covered almost nine times the 6.79 million shares on offer. The retail portion, in which bids cannot exceed Rs 2 lakh, was covered nearly 3.27 times the 1.18 million shares on offer. However, the portion set aside for non-institutional investors, comprising corporate bodies and wealthy individuals, was covered just 30.5%.

The IPO had already crossed the three-fourth mark on its first day on Wednesday.

The Noida-based company, which counts Motilal Oswal as its private equity backer, had on Tuesday raised Rs 179.78 crore ($28.04 million) by selling 1.01 million shares to a bunch of institutional investors at the upper end of the Rs 1,760-1,766 price band.

Asia-focused equity hedge fund Steadview Capital Mauritius Ltd and the world’s oldest sovereign wealth fund, Kuwait Investment Authority, were among the institutions that participated in the anchor allotment.

Dixon Technologies is seeking a valuation of as much as Rs 1,946.01 crore (around $305 million) through the IPO. At the upper end of the price band, the IPO size works out to Rs 545.27 crore ($85.3 million), and it will result in a 28% stake dilution on a post-issue basis.

The IPO comprises a fresh issue of shares worth Rs 60 crore, besides a secondary sale of 3.05 million shares by promoters and partial exit by existing shareholder Motilal Oswal Private Equity Investment Advisors.

The company has hired IDFC Bank, IIFL Holdings, Motilal Oswal Investment Advisors and Yes Securities as book-running lead managers for the IPO.

BRNL picks up pace
The IPO of road developer Bharat Road Network Ltd (BRNL), promoted by SREI Infrastructure Finance Ltd, picked up pace on the second day with demand for 70% of the shares on offer. The IPO was covered merely 22% on day one on Wednesday.

The public offering of 29.3 million shares received bids for a little more than 20.36 million shares, stock-exchange data showed.

The retail book was covered more than twice the 2.93 million shares on offer. The qualified institutional buyers’ category was covered nearly 52% of the 21.97 million shares on offer. The portion set aside for non-institutional investors, comprising corporate bodies and high-net-worth individuals, was covered just 6.33%.

BRNL is seeking a valuation of over 1,721 crore ($268 million) through the issue.

At the upper end of the price band, the IPO size works out to Rs 600.65 crore ($93.91 million). The IPO comprises a fresh issue of 29.3 million shares and will result in a 34.9% stake dilution on a post-issue basis.

Following the IPO, the company aims to sponsor the Solapur Tollways Pvt. Ltd project with a Rs 51.47-crore infusion. The sponsor investment will be used by Solapur Tollways to carry out activities for its Solapur-Maharashtra/Karnataka border section of NH-9.

In addition, BRNL aims to acquire subordinated debt—in the form of unsecured loans, warrants and optionally convertible debentures (OCDs), among other instruments—worth Rs 372.25 crore held by SREI Infrastructure. It will use the balance for general corporate purposes.

Inga Capital Pvt. Ltd, Investec Capital Services (India) Pvt. Ltd and SREI Capital Markets Ltd are the financial advisers for the IPO.

BRNL joins a host of infrastructure and construction firms, such as Shankara Building Projects Ltd, PSP Projects Ltd, Dilip Buildcon, GR Infraprojects Ltd and GVR Infra Projects Ltd, which are looking to tap the public market.

Other infrastructure firms that have gone public in the past couple of years include Sadbhav Infrastructure Project Ltd, PNC Infratech Ltd and MEP Infrastructure Developers Ltd.

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PE-backed Dixon Tech’s IPO subscribed four times on day 2; BRNL covered 70%

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