Ahmednagar-based Prabhat Dairy Pvt Ltd's initial public offer (IPO), which opened for subscription on Friday (August 28), failed to clear the ropes on the third and final day. The firm has now extended the issue closure by three days and also cut the price band.
It has cut the price band of the issue from Rs 140-147 a share to Rs 115-126 and said the issue would now close on September 4. It has also offered a discount of Rs 5 a share to retail investors.
The new price band means the company can now raise under Rs 459 crore against its target of around Rs 535 crore of which Rs 235 crore was to go to selling shareholders including its PE backers Rabo India PE and Proparco.
The issue received bids for just 10 million equity shares against 36 million equity shares on offer, translating into 28 per cent subscription, according to data collated by the stock exchanges.
The public issue was covered around 15 per cent on day 1 and just 20 per cent at the end of day 2, bulk of it coming from qualified institutional buyers (QIBs), after it opted out of bringing anchor investors.
On Tuesday and final day of the issue, QIBs subscribed a little over 37 per cent of the portion reserved for the segment, while retail investors subscribed just around 26 per cent of the portion reserved for them. HNIs and corporate almost gave it a miss altogether.
The IPO seems to have at least partly suffered due to the continuing bloodbath in the stock market with the benchmark indices tanking over 2 per cent over poor GDP growth and global shares sell-off.
This is the first new IPO to have failed to sail through in the original issue period. In March, another PE-backed firm, theme parks operator Adlabs Entertainment Ltd, had to extend the issue period and cut the issue price band to see through the IPO.
In the same month, regional cable TV and broadband distribution firm Ortel Communications Ltd barely managed to see through its initial public offer (IPO) after its private equity backer decided to cut the offer-for-sale portion of the issue. New Silk Route part exited in the IPO.
Prabhat Dairy, an integrated milk and dairy products company catering to institutional as well as retail customers, had offered 36.4 million equity shares to raise up to Rs 300 crore through a fresh issue besides an offer for sale.
Offer for sale includes sale of up to 3.15 million equity shares by Nirmal Family Trust (promoters); up to 6.58 million equity shares by The India Agri Business Fund Ltd (managed by Rabo Equity Advisors or Rabo India PE); up to 23,000 by The Real Trust; and up to 4.95 million shares by French DFI Proparco.
Incorporated in 1988, Prabhat Dairy markets dairy products under Prabhat, Flava and Milk Magic brands. It is a regional player with operations mainly in Maharashtra.
As of March 15, 2015, the company had an aggregate milk processing capacity of 1.5 million litres per day. The poor response to its issue is also a blow for the dairy sector at large that has attracted lot of private capital over the last few years.
Edelweiss Financial Services, Macquarie Capital Securities and SBI Capital Markets are the book running lead managers to the issue.