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Spandana Sphoorty IPO sails through; Sterling & Wilson hits one-third mark
Photo Credit: VCCircle

The initial public offering of Hyderabad-based microlender Spandana Sphoorty Financial Ltd sailed through on Wednesday while the share sale of Sterling & Wilson Solar Ltd made slow progress.

Spandana’s offering of 9.82 million shares, excluding the anchor allotment, was covered 1.05 times after getting bids for 10.31 million shares at the end of the final day, stock-exchange data showed.

The portion set aside for qualified institutional buyers was subscribed 3.1 times while the quota reserved for non-institutional investors, such as corporate houses and affluent individuals, saw 55.5% bids. The portion of shares reserved for retail individual investors, whose bid application cannot exceed Rs 2 lakh in value, was subscribed about 9.2%.

On the grey market, Spandana’s shares were quoting at a slight discount to its price band of Rs 853-856 apiece. This may have led to weak demand from retail and affluent investors in a volatile market.

The grey market is an over-the-counter market where IPO shares are traded before the official listing on a stock exchange.

Indian shares ended lower on Wednesday, after the central bank announced an unconventional 35 basis-point cut in interest rates, signalling growth concerns. The broader NSE Nifty ended 0.85% lower at 10,855.50 while the benchmark BSE Sensex fell 0.77% to 36,690.50.

Spandana's IPO had made a slow start on its first day on Monday, getting 6% demand for its shares. It picked up pace on the second day to see 30% subscription.

Last Friday, Spandana attracted prominent domestic and foreign investors, including a private equity firm and a hedge fund, as anchor investors. It raised Rs 360.28 crore ($51.7 million) by allotting nearly 4.21 million shares to 18 anchor investors at the upper end of its price band.

Spandana is seeking a valuation of Rs 5,504.64 crore ($791 million) from the IPO.

The IPO is a combination of fresh shares worth Rs 400 crore and an offer for sale worth Rs 800 crore by the microlender’s institutional backers. The IPO will see a stake dilution of 21% on a post-issue basis. That's lower than the 27.71% stake dilution expected at the time the company filed for its IPO.

Spandana counts homegrown private equity firm Kedaara Capital, venture capital firm Helion Venture Partners and strategic investor Valiant Mauritius Partners FDI Ltd as its backers.

Kedaara and other investors were previously hoping to raise an estimated Rs 1,125 crore by selling 13.15 million shares. Instead, they are now selling a total of 9.35 million shares.

Axis Capital, ICICI Securities, IIFL Holdings, JM Financial, IndusInd Bank, and Yes Securities are the merchant bankers managing the IPO.

Sterling & Wilson

Sterling & Wilson's public offering crossed the one-third mark on day two after its 22.17 million shares issue, excluding the anchor allotment, received bids for nearly 7.10 million shares. That amounts to a subscription of nearly 33% at the end of day two, stock-exchange data showed.

The portion set aside for qualified institutional buyers saw 19.5% subscription while the quota for non-institutional investors saw 68.5% bids. The portion of shares reserved for retail individual investors was subscribed about 15.5%.

The solar engineering company is seeking a valuation of Rs 12,508 crore ($1.81 billion) at the upper end of the price band. That’s lower than the estimated Rs 18,010 crore at the time of filing its draft prospectus in April this year.

The IPO comprises a complete secondary market sale of 40.06 million shares by chief executive Khurshed Yazdi Daruvala and promoter entity Shapoorji Pallonji and Co. Pvt. Ltd. The IPO size is now pegged at Rs 3,125 crore, down from the planned Rs 4,500 crore when it filed its proposal. After the IPO, the stake of the company’s promoter group will decline to an estimated 75% from 100%.

ICICI Securities, Axis Capital, Credit Suisse, Deutsche Equities India, IIFL Holdings, SBI Capital Markets, IndusInd Bank and Yes Securities are managing the IPO.

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