The initial public offering of speciality chemicals maker Galaxy Surfactants Ltd was almost fully subscribed on the first day of the issue on Monday, led by institutions as well as retail investors.
The public issue of 4.43 million shares, excluding the anchor investors’ portion, received bids for 4.41 million shares, stock-exchange data showed.
Institutional buyers bid for 2.71 times their quota of 1.26 million shares. The retail portion, in which bids cannot exceed Rs 2 lakh, was covered 44% of the 2.21 million shares on offer.
The portion for non-institutional investors, comprising corporate bodies and high net-worth individuals (HNIs), was subscribed only 1%.
HNIs typically bid on the final day of a public offering to keep their financing costs low. They borrow short-term capital from various avenues, barring banks, to fund their IPO applications. HNIs deploy a small fraction of their own capital — margin money — upfront. Additional capital raised through short-tenure loans helps them place large bids.
On Thursday, the Navi Mumbai-based company sold https://www.vccircle.com/abu-dhabi-kuwait-sovereign-funds-among-galaxy-surfactants-anchor-investors/ about 1.9 million shares to anchor investors at the upper end of the Rs 1,470-1,480 price band. At the upper end of the band, the IPO size is Rs 937 crore ($147 million).
Abu Dhabi Investment Authority and Kuwait Investment Authority bought 100,000 shares each. Other anchor investors mostly included domestic and foreign mutual funds and insurance companies.
In November 2017, Galaxy had refiled its draft red herring prospectus for the IPO. It received the Securities and Exchange Board of India’s approval for the IPO on 12 January 2018.
Galaxy was the second company to receive regulatory clearance for an IPO in 2018. As many as 46 firms had received clearances for IPOs in 2017, according to SEBI’s website.
Galaxy’s previous attempt to go public in May 2011 had failed. At the time, Galaxy had aimed to raise up to Rs 201 crore. However, it withdrew the IPO a day before closing as the issue was subscribed just 30%.
Now, Galaxy’s renewed public offering comprises entirely a sale of 6.33 million shares by promoters and individuals. In all, 307 individuals will sell shares through the IPO. The company will not receive any proceeds from the IPO.
The company is seeking a valuation of Rs 5,247.30 crore ($823 million) through its IPO. Promoter stake will decline to 70.91% after the IPO from the present 76.98%, VCCircle estimates show.
Galaxy will join peer Fine Organic Industries Pvt. Ltd, which is also preparing for an IPO.
ICICI Securities, Edelweiss Financial Services and JM Financial Institutional Securities are the merchant bankers managing the IPO.
Galaxy, which was incorporated in May 1986, makes surfactants and other speciality ingredients for personal care and home care industries. Its products are used in consumer-centric personal care and home care products, including, skin care, oral care, hair care, cosmetics, toiletries and detergent products.
The company claims to have significantly expanded and diversified its product profile since its inception 31 years ago. It caters to multinational, regional and local players operating in home and personal care industries.
Its product portfolio, divided into performance surfactants and speciality care products, comprises over 200 product grades marketed to over 1,700 customers across 70 countries.
Galaxy counts Cavinkare, Colgate-Palmolive (India), Dabur India, Henkel, Himalaya, L’Oréal, Procter and Gamble Home Products, RB (formerly Reckitt Benckiser), and Unilever, among its key clients.
Since 2002, the company has received 47 patents, including 10 in the US, and two each from China, European Union, Japan, Russia and India.
The company owns and operates seven manufacturing facilities, of which two are located outside India. Besides, it had recently set up a pilot plant at Tarapur, Maharashtra, to scale up production.
For additional information on Galaxy’s proposed IPO, click here.
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