Ahmednagar-based Prabhat Dairy Pvt Ltd’s initial public offer (IPO), which opened for subscription last week (August 28), is struggling even after cutting the price band and extending the issue period.
At the end of day 5, just 42 per cent of the issue was covered leaving the fate of the IPO hanging for the last day. The extended issue is to close on Friday, September 4. It is not unusual for IPOs to get bumper subscription on the final day, though.
While qualified institutional buyers’ (QIBs) bid for 66 per cent, retail investors, HNIs and corporates’ portion did not budge from day 4. Retail investors applied for just one-fourth of the portion reserved for them and HNI & corporates’ portion failed to find takers, according to the data available with the stock exchanges.
On Tuesday, the final day of the original issue closure period, the dairy firm had cut the price band from Rs 140-147 a share to Rs 115-126 and said the issue would now close on September 4. It also offered a discount of Rs 5 a share to retail investors.
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 did not bring in anchor investors.
Incorporated in 1988, Prabhat Dairy is an integrated milk and dairy products company in India catering to institutional as well as retail customers. Its products include toned and raw chilled milk, sterilised condensed milk, milk powder, lassi, butter and ghee. It also supplies dairy-based food ingredients to multinationals and Indian food and beverage companies.
The firm’s private investors Rabo India PE and Proparco are looking to part-exit in the issue.
The poor performance of the issue strikes a big blow for the dairy sector at large, till recently a hot sector for private equity investors.
Edelweiss Financial Services, Macquarie Capital Securities and SBI Capital Markets are the book running lead managers for the issue.