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Reliance Nippon Life IPO subscribed 81 times

27 October, 2017

Reliance Nippon Life Asset Management Co Ltd, India’s third-largest mutual fund and the first in the space to go public, received humongous investor turnout on the final day of its initial public offering on Friday.

Reliance Nippon Life’s public offering of 42.84 million shares, excluding the anchor allotment, received bids for 3.48 billion shares on the third day, stock-exchange data showed. The book was subscribed 81.32 times around the close of the public issue.

The portion set aside for qualified institutional buyers (QIBs) was subscribed 118.4. The non-institutional investors’ category—comprising high net-worth individuals and corporate bodies—was subscribed nearly 210 times.

Retail investors, whose bid value cannot exceed Rs 2 lakh per application, bid 5.27 times the shares on offer, the data showed.

The IPO was covered nearly five times on the first day of the issue on Wednesday after receiving full subscription within five minutes of opening with bids pouring in from domestic private banks, besides foreign portfolio investors.

It made progress on day two on Thursday after receiving 7.5 times the demand.

Anil Ambani-led Reliance Nippon Life joins firms like MAS Financial Ltd, hypermarkets chain D-Mart operator Avenue Supermarts Ltd and Capacit’e Infraprojects Ltd that also saw huge investor turnout for their public issues.

RNAM received bids worth Rs 1.03 lakh crore for an IPO of Rs 1,542.24 crore.

Reliance Nippon Life, a joint venture between industrialist Anil Ambani-led Reliance Group and Japan’s Nippon Life, is seeking Rs 15,422.4 crore ($2.36 billion) in valuationthrough the IPO.

On Tuesday, India’s third-largest mutual fund manager raised Rs 462.67 crore ($71.08 million) by selling shares to a bunch of anchor investors ahead of its IPO. It allotted 18.36 million shares at the upper end of the Rs 247-252 price band, according to a stock-exchange filing.

The total IPO size is pegged at Rs 1,542.24 crore at the upper end of the price band. The issue will result in a 10% stake dilution on a post-issue basis.

The IPO comprises a fresh issue of 24.48 million shares and a sale of 36.72 million shares by promoter entities.

Nippon will sell 25.49 million shares, while Reliance Capital will offload the remaining. The IPO would bring parity to the holding of both partners at 42.88% each. Currently, Nippon holds a 49% stake.

Nippon had originally picked up a 26% stake in the Indian asset management firm for $290 million in 2012, valuing it at Rs 5,600 crore ($920 million) then. It bought 9% more in 2014 and an additional 14% the following year.

The promoters will get three years from the date of listing to meet the 25% minimum public shareholding norms by the capital markets regulator.

Reliance Nippon Life had filed its draft red herring prospectus on 18 August. It received regulatory approval for the IPO on 5 October. In July, VCCircle had first reported that the company hired merchant bankers to run the listing process.

JM Financial, Nomura, CITIC CLSA, and Axis Capital are the global coordinators and book running lead managers to the IPO. Edelweiss, IIFL, SBI Caps and Yes Securities are the other merchant bankers.

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