Quess Corp IPO oversubscribed on day 2

The initial public offering (IPO) of business services provider Quess Corp Ltd was oversubscribed on Thursday with one more day to go as institutional investors joined the action while retail investors bid even more.

The IPO, which had received strong interest from retail investors on day 1 itself, saw institutional investors bidding for 2.7 times the number of shares reserved for them. Retail investors’ portion was covered 9.8 times while high net-worth individuals and companies bid for only a third of the shares reserved for them, exchange data shows.

Institutional investors had cold-shouldered the issue on the first day. The overall issue, which was covered 41% at the end of the first day, was subscribed 3.4 times at the end of day 2.

HNIs and institutional investors typically come in hoards on the last day, which means the issue is set for a far bigger oversubscription.

Earlier, Quess Corp raised Rs 180 crore ($26.5 million) from a group of 15 anchor investors including entities under Fidelity, Blackrock, Goldman Sachs, Wasatch and Grandeur Peak.

The company finalised the anchor allotment at the upper end of the Rs 310-317 price band that it fixed for its IPO, which closes for subscription on Friday.

The IPO comprises a fresh issue of shares to raise Rs 400 crore to fund its expansion plans and repay debt (Rs 50 crore). Quess will also use the proceeds to fund capital expenditure requirements of the holding company as well as its subsidiary MFXchange US (Rs 70.68 crore), incremental working capital requirement (Rs 157.9 crore), acquisitions and other strategic initiatives (Rs 80 crore).

The IPO is being managed by Axis Capital, ICICI Securities, IIFL Holdings and YES Securities.

Quess Corp, which was set up in 2007, had filed its draft red herring prospectus for the IPO with the capital markets regulator Securities and Exchange Board of India in February. It received SEBI approval last month. It is eyeing a valuation of as much as Rs 4,000 crore (about $590 million).

Quess, earlier known as IKYA Human Capital Solutions Ltd, will be the second listed firm for Canada's Fairfax Financial Holdings Ltd in India. Its parent Thomas Cook is already a listed firm.

IKYA was founded by serial entrepreneur Ajit Isaac, who sold PeopleOne Consulting to Swiss staffing giant Adecco in 2004. It was acquired by travel and tour company Thomas Cook in early 2013 for Rs 256 crore. The deal marked an exit for India Equity Partners, which invested in IKYA back in 2008. It was rebranded as Quess earlier last year.

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