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Photo Credit: Shah Junaid/VCCircle

Shalby IPO sails through on final day; Future Supply issue covered 73% on day 2

07 December, 2017

The initial public offering of Ahmedabad-based multi-speciality hospital chain Shalby Ltd managed to sail through on the final day, Thursday, while the share sale of logistics company Future Supply Chain Solutions Ltd inched closer to the three-fourths mark on the second day.

Shalby’s issue received bids for 39.50 million shares, against the 14.52 million shares on offer, excluding the anchor portion, stock-exchange data showed. The book was subscribed 2.72 times as the issue approached its close.

Qualified institutional buyers bid 4.34 times the 1.95 million shares reserved for them. The retail portion was covered 2.78 times.

The portion set aside for non-institutional investors, comprising corporate bodies and wealthy individuals, was covered just 42% as margin funding seemed risky due to the volatility in the secondary market.

Over the past seven sessions, BSE’s benchmark Sensex fell nearly 4% since its record highs of 27 November. However, the 30-share gauge of top Indian firms surged 1% on Thursday, partially recovering its recent losses.

High net-worth individuals (HNIs), typically, bid on the final day of an IPO to keep their financing costs at a bare minimum.

The issue had reached the half-way mark on the second day, while on the opening day, Shalby shares were subscribed 21%.

On 4 November, the multi-speciality hospital chain had raised Rs 150.53 crore ($23.33 million) from a bunch of anchor investors, including private equity firm Indgrowth Capital and investment bank Goldman Sachs. Shalby sold 6.07 million shares to 13 anchor investors at the upper end of the Rs 245-248 price band, stock-exchange filings showed.

The company, which is looking to raise Rs 504.8 crore ($78.26 million) from the IPO, is seeking a valuation of Rs 2,678.64 crore. The IPO comprises a fresh issue of shares worth Rs 480 crore, besides a secondary sale of shares worth Rs 24.8 crore by promoter Vikram I Shah.

Earlier, the company had proposed to issue fresh shares worth Rs 580 crore, according to its draft red herring prospectus.

The IPO will see an 18.84% stake dilution on a post-issue basis. Based on the upper end of the price band, promoters’ holding will fall to 79.4% after the IPO from the current 97.86%.

The promoters will get three years from the date of listing to meet the regulatory requirements of a minimum 25% public float for listed firms.

VCCircle had first reported in September 2016 that Shalby was eyeing an IPO and was in the process of hiring merchant bankers.

The firm had earlier explored raising capital via the private equity route, but then decided to list as it would allow it to raise more money.

Edelweiss Financial Services, IDFC Bank and IIFL Holdings were the merchant bankers managing the IPO.

Future Supply Chain IPO
Future Supply’s public offering of 6.84 million shares, excluding anchor allotment, was covered 73%, receiving bids for 5.04 million shares, stock-exchange data showed.

Qualified institutional buyers bid 62.5% of the 1.95 million shares reserved for them. The retail portion was covered 83%. The portion set aside for non-institutional investors, comprising corporate bodies and wealthy individuals, was covered nearly 66.3%.

Future Supply’s IPO was subscribed 31% on the first day on Wednesday.

On Tuesday, the logistics arm of the Kishore Biyani-led Future Group had raised Rs 195 crore ($30 million) through the sale of 2.94 million shares to 13 anchor investors at the upper end of the Rs 660-664 price band. The investors mostly included domestic mutual funds.

The IPO, which closes on Friday, entirely comprises a sale of 9.78 million shares by the promoter entity, Future Enterprises, and Singapore-based distressed assets fund manager SSG Capital. The IPO will result in a 24.42% stake dilution on a post-issue basis. The promoter’s stake will drop to 52.47% after the IPO from 57.35%, while SSG’s stake will come down to 14.63% from 34.18%.

At the upper end of the band, the selling shareholders will raise Rs 649.69 crore ($100.72 million) at a valuation of Rs 2,660 crore ($412 million).

SSG had sold a 5% stake as part of a pre-IPO round last month, marking the first such liquidity event in its India portfolio. The Singapore firm had acquired a 40% stake in Future Supply in April 2016 at a valuation of Rs 1,450 crore.

Future Supply had filed its draft red herring prospectus for the IPO on 23 August. It had received an approval from the Securities and Exchange Board of India on 26 October.

Future Supply Chain will become the group’s sixth firm to list on the exchanges. Other listed firms are Future Retail, Future Consumer, Future Market Networks, Future Enterprises and Future Lifestyle Fashions.

Edelweiss, CITIC CLSA and Nomura are the global coordinators and book running lead managers for the IPO. IDFC, IIFL and Yes Securities were the other merchant bankers involved.

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Shalby IPO sails through on final day; Future Supply issue covered 73% on day 2

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