Standard Chartered PE-backed engineering firm Innoventive Industries Ltd made a poor debut on Friday, listing 5.9 per cent below issue price of Rs 117 at BSE, and swung between Rs 86.3 and Rs 114.85 before ending the day at Rs 93.60 a share or 20 per cent below issue price. This was partly expected after the firm barely scraped through its maiden public issue with 1.2x subscription, primarily backed by corporate and high networth investors (HNIs).
The issue which was closed for institutional investors ahead of others, saw poor participation from them, especially from foreign institutional investors. QIB portion was subscribed just 85 per cent. But both retail and HNIs oversubscribed their portion to make up and see through the issue.
VCCircle had hinted at a poor listing in our earlier report.
The issue price band of Rs 117-Rs 120 could have ensured as much as 9 per cent in unrealised gain to Standard Chartered PE which had picked 10.14 per cent stake in the Pune-based company through a mix of share purchase from non-promoters, besides a fresh issue of shares, three months ago.
The fresh issue was at Rs 117, which was also the issue price and the lower end of the IPO price band, but the share purchased from promoters was at a discount.
In total, Standard Chartered PE picked the stake through two funds for Rs 46 crore or just over $10 million. The PE firm is now sitting with unrealised losses of around 15 per cent at the current share price.
But private equity firm Lighthouse, another early investor, is sitting on unrealised gains of around 50 per cent. Kavos Capital, a special purpose vehicle set up by India 2020 Ltd (a private equity fund sponsored by Lighthouse Funds), had originally invested Rs 15 crore in June, 2008, and was allotted fresh shares last July, under a bonus issue in which other shareholders or essentially the promoters gave up their right to subscribe to new shares.
Kavos brought in additional Rs 35 crore through a preferential allotment in August and its total holding of around 8 million shares representing 19.58 per cent has the average cost of purchase pegged at Rs 62.2 per share.
Innoventive has raised around Rs 220 crore through the public issue which will be used for capacity expansion (Rs 163 crore) and repaying term loan (Rs 50 crore).
The company is into manufacturing and sale of precision steel tubes, tubular components, auto components, machined components and other steel products which are used across diverse industrial sectors such as transportation, oil & gas, power, farm equipment and general engineering. It has six manufacturing facilities, located across Pune and Silvassa.
The company is promoted by first-generation technocrats who acquired the company in 2002. Its key customers include Bajaj Auto, Bhel, Thermax, John Deere India, Gabriel India Ltd and Alstom Projects Ltd.