Messaging and voice application programming interface company Route Mobile Ltd received a stellar response to its initial public offering (IPO) on the final day on Friday with strong demand across all investor categories.
The offering of 12.17 million shares—excluding the anchor investors’ portion—received bids for nearly 892.34 million shares. The book was subscribed 73.3 times on the third and final day, stock exchange data showed.
Institutional investors bid for about 89.76 times their quota, stock-exchange data showed, while retail investors, whose share application cannot exceed Rs 2 lakh in value, bid for 12.67 times the shares reserved for them.
The portion set aside for non-institutional investors such as corporate houses and high net-worth individuals (HNIs) was covered nearly 193 times.
HNIs typically bid on the final day of a public offering to keep their IPO financing costs at a minimum. They borrow short-term capital from various avenues, barring banks, to fund their IPO applications and deploy only a small fraction of their own capital—called margin money—upfront.
On the grey market, shares of Route Mobile were quoting at a premium of Rs 135-150 apiece over its price band, two grey market dealers told VCCircle.
The grey market is an over-the-counter market where IPO shares are traded before the official listing on a stock exchange.
Ahead of the IPO, the company raised Rs 180 crore ($24.4 million) from a bunch of anchor investors, by allotting 5.14 million shares at the upper end of the Rs 345-350 per share price band to 23 institutional investors including Kuwait Investment Authority and Vantage Equity Fund, a Category-III alternative investment fund (AIF) floated by Kenneth Andrade-led Old Bridge Capital.
Route Mobile was seeking a valuation of Rs 1,990 crore through the IPO that comprised a fresh issue of shares worth Rs 240 crore and an offer for sale worth Rs 360 crore by promoters Sandipkumar Gupta and Rajdipkumar Gupta.
The IPO will result in a stake dilution of 30.15% on a post-issue basis at the upper end of the price band.
ICICI Securities, Axis Capital, Edelweiss Financial Services and IDBI Capital Markets & Securities are merchant bankers managing the IPO.
Route Mobile, a messaging and voice application programming interface company, does not have a directly comparable listed peer in India. The company will become the second firm in the larger mobile communication services segment to go public.
Singapore-based Affle Holdings Pte. Ltd, which provides mobile commerce and marketing solutions for consumers and businesses, went public in July 2019. Its shares made a positive debut on the stock exchanges.
In December 2010, One97 Communications Ltd, the parent of e-payments and e-commerce firm Paytm, had filed a draft prospectus for an IPO but shelved its plans citing volatile market conditions.
Route Mobile, formerly RouteSms Solutions Ltd, was founded in 2004. It employs close to 300 people.
The company caters to requirements of the mobile communications industry, offering solutions and services to mobile network operators, enterprises, over-the-top content firms, SMS aggregators and resellers.
Its solutions include an SMS firewall, which monitors and controls large quantities of text messages sent to one or multiple destinations.
The company also monitors the content of text messages and filters the messages based on defined keywords, rules, subscriber identity and locations to prevent spoofing.
Earlier this week, JPMorgan PE Fund-backed Happiest Minds Technologies also received an astounding response to its IPO with strong demand across all investor categories. The book was subscribed nearly 151 times at the end of the issue, stock exchange data showed.
All three IPOs in the pandemic -- Rossari Biotech, Route Mobile, and Happiest Minds -- have seen strong investor turnouts.