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PE-backed MAS Financial’s IPO covered 128 times; IEX nears halfway mark on day 2

10 October, 2017

The initial public offering of MAS Financial Services Ltd received bids for 128 times the shares on sale thanks to strong demand from investors across categories on the final day of the issue on Tuesday.

The public offering of 7.12 million shares, excluding the anchor allotment, got bids for 912.21 million shares, stock-exchange data showed.

The Ahmedabad-based company’s IPO was fully subscribed on its opening day and was covered nearly five times on Monday.

MAS Financial counts Sarva Capital as its private equity backer. German and Dutch development finance institutions DEG and FMO are among its other investors.

Meanwhile, another ongoing IPO made little progress. Indian Energy Exchange Ltd’s public offering of 4.24 million shares, excluding the anchor allotment, was covered just 43% after receiving bids for 1.84 million shares at the end of the second day, stock exchange data showed.

Bidding was led by retail investors but response from institutional investors and high net-worth individuals was lukewarm.

The quota of shares reserved for retail investors, whose bid value cannot exceed Rs 2 lakh per application, was covered 83.63%. The portion set aside for qualified institutional buyers was subscribed 1% while the quota of shares reserved for non-institutional investors, comprising corporate bodies and wealthy investors, received bids for 5.8% the shares on offer.

The IPO was subscribed roughly 15% on the first day on Monday.

MAS Finacial’s IPO
The IPO received strong response from both institutional and non-institutional investors. The portion reserved for institutional investors was covered 150 times. Retail investors bid for 15.63 times the 3.47 million shares on offer.

The quota of shares reserved for non-institutional investors, comprising corporate bodies and wealthy individuals, was subscribed 381 times. Wealthy individuals typically bid on the final day of a public offering to minimise their IPO financing costs.

The IPO size is Rs 460.04 crore ($70 million). This comprises an issue of fresh shares worth Rs 233 crore and a sale of shares by existing investors worth Rs 227.04 crore.

Several domestic brokerage firms had advised clients to subscribe to MAS Financial’s IPO citing its strong fundamentals. ICICI Securities Ltd analysts Kajal Gandhi, Vishal Namoliya and Vasant Lohiya said in a report that the company is fundamentally strong with robust growth in advances, steady asset quality and healthy return ratios.

The company is seeking a valuation of Rs 2,525.64 through the IPO that will result in roughly 18.5% stake dilution on a post-issue basis. Last week, the company raised Rs 135.91 crore from anchor investors by selling 2.96 million shares at the upper end of Rs 456-459 price band.

MAS had filed its draft red herring prospectus with the Securities and Exchange Board of India on 27 March. It received the market regulator’s nod on 26 May.

The company will deploy the capital raised over this financial year and the next. The IPO will also help it augment its capital base to meet the capital adequacy norms.

Motilal Oswal Investment Advisors Pvt. Ltd is the sole merchant banker managing the IPO.

Indian Energy Exchange IPO
IEX, India’s first exchange to trade in electricity and renewable energy certificates, is seeking a valuation of Rs 5,003.63 crore through the IPO that will see a 20% stake dilution. The IPO will close on Wednesday.

Ahead of the IPO, IEX raised Rs 300 crore from a bunch of anchor investors including Capital Group, Eastspring Investments and Nomura Ireland by selling 1.81 million shares at the upper end of the Rs 1,645-1,650 price band.

The IPO comprises a sale of 6.06 million shares by shareholders; the company is not raising any capital. The selling shareholders will raise Rs 1,001 crore ($153 million) at the upper end of the price band.

Axis Capital, Kotak Investment Banking and IIFL Holdings are managing IEX’s IPO.

The company will join a clutch of exchanges and financial market infrastructure companies that have either gone public over the years or have been planning to do so.

Multi Commodity Exchange of India Ltd (MCX) became the first exchange in India to go public after listing its shares five-and-a-half years ago. BSE Ltd became the second bourse to go public, in February this year. BSE’s larger rival and India’s largest stock exchange, National Stock Exchange (NSE), is also working towards a listing and aims to go public next year.

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PE-backed MAS Financial’s IPO covered 128 times; IEX nears halfway mark on day 2

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