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RBL Bank’s IPO covered almost 70 times

23 August, 2016

The initial public offering of RBL Bank Ltd was subscribed almost 70 times on the final day of the issue on Tuesday, as investors bid heavily for shares of the first private-sector bank to go public in a decade.

The issue of 37.9 million shares had received bids for 2.6 billion shares by the end of the day, stock-exchange data show. The quota reserved for institutional buyers was covered 85 times while non-institutional investors’ portion was subscribed 198 times. Retail investors bid for about 5.6 times their quota.

RBL Bank is the latest example of investors gobbling up first-time share sales in India this year, after business services provider Quess Corp and enzyme maker Advanced Enzyme Technologies Ltd broke multi-year records.

Quess Corp’s IPO was covered 144 times while that of Advanced Enzyme got bids for 116 times the shares on sale, making these the biggest and the second-biggest offerings by subscription in eight years.

Also this year, diagnostics firm Thyrocare Technologies Ltd’s public offering was covered 73 times and TeamLease Services Ltd’s IPO was subscribed 66 times.

The strong response to these IPOs comes after market volatility in the first half of this year had forced several firms to skip their planned share sales. However, a rebound in the secondary markets over the past couple of months has offered hope to companies looking to float IPOs. Many of these companies are also backed by private equity firms, which are looking at some liquidity activity to show returns to their investors.

RBL Bank’s IPO had crossed the two-thirds mark on the first day of the offering on Friday and was covered three times on Monday.

Earlier, RBL Bank had raised Rs 364 crore ($54 million) by selling shares to anchor investors including private equity firm ChrysCap and Wipro chairman Azim Premji’s private investment arm, PremjiInvest. 

The lender, earlier known as Ratnakar Bank Ltd, has fixed Rs 224-225 a share as the price band for the IPO. This will translate into an issue worth Rs 1,213 crore ($182 million) at the upper end of the price band and value the lender around $1.25 billion.

Before RBL Bank, the last private-sector bank to float an IPO was YES Bank in 2005. In 2010, state-run Punjab & Sind Bank went public.

RBL Bank had earlier cut the size of the IPO after it raised capital from a bunch of investors in a pre-IPO placement late last year and as its selling shareholders trimmed the offer for sale. The lender cut the size of both the fresh issue and the number of shares on offer for sale.

Originally, it had sought to raise up to Rs 1,100 crore ($162 million then) through a fresh issue of shares and an offer for sale of 17.56 million shares by some shareholders.

The revised IPO seeks to raise Rs 832.5 crore ($125 million) through the fresh issue and an offer for sale of up to 16.9 million shares.

One of its private equity investors, Beacon India Private Equity Fund, is selling all its shares. Gaja Capital and Capvent will part-exit in the IPO. 

RBL Bank had received approval from the Securities and Exchange Board of India (SEBI) on 27 July, nearly a year after it applied.

The issue got delayed as the capital markets regulator had asked the bank to resolve the issue of past violations of the Companies Act, wherein it had issued securities to a higher number of subscribers than permitted. SEBI agreed to settle the case in June.

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RBL Bank’s IPO covered almost 70 times

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