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PE-backed Varroc Engineering’s IPO fully subscribed on second day
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The initial public offering (IPO) of auto components maker Varroc Engineering Ltd was fully subscribed on the second day on Wednesday as institutional investors continued to bid for shares.

The Tata Opportunities Fund-backed company received bids for 14.47 million shares at the end of the second day. That is 1.02 times the total 14.18 million shares on offer, stock-exchange data showed.

The portion of 4.02 million shares reserved for institutional buyers was subscribed about 3.2 times, while the quota for retail investors was covered 22%. Non-institutional investors remained largely on the sidelines with just 4% bids.

Varroc’s IPO had reached the one-third mark on its first day on Tuesday. The share sale closes on Thursday.

A day ahead of the IPO, the company raised Rs 583.7 crore ($86 million) from anchor investors including Canadian pension fund CDPQ. Varroc allocated a tad more than 6 million shares to 18 anchor investors at the upper end of the price band of Rs 965-967 apiece, it said in a stock-exchange filing late Monday.

Varroc is is eyeing a valuation of as much as Rs 13,036 crore ($1.9 billion) through the share sale. At the upper end of the range, the IPO will raise about Rs 1,955 crore.

The public issue comprises a sale of 20.22 million shares, according to the red herring prospectus. This marks an increase from the 18.53 million shares proposed in the draft red herring prospectus. The revised offer will result in a 15% stake dilution on the post-issue basis compared with 13.75% earlier.

Singapore-based Omega TC Holdings Pte Ltd, a fund managed by Tata Opportunities, and Tata Capital Finance Services will sell their entire holding in the IPO.

Omega will sell all the 16.91 million shares it holds. Tata Capital Finance will sell all the 1.55 million shares it owns. Promoter Tarang Jain is offloading a small chunk of shares.

The company will not receive any proceeds from the offer, and the money will go to the promoter and existing private equity shareholders.

Varroc had filed its draft red herring prospectus with the capital markets regulator on 28 March.

The Securities and Exchange Board of India had approved the IPO on 6 June.

Kotak Mahindra Capital Co, Citigroup Global Markets India, Credit Suisse Securities (India) and IIFL Holdings are the merchant bankers managing Varroc Engineering’s IPO.

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