State-run Midhani’s IPO sails through; ICICI Securities’ public issue covered 36%
Photo Credit: Shah Junaid/VCCircle

State-owned alloy maker Mishra Dhatu Nigam Ltd (Midhani)’s initial public offering sailed through on the final day on Friday, thanks to support from state-run insurance behemoth Life Insurance Corporation of India.

The IPO, which did not have an anchor allotment, received bids for 59.02 million shares out of 48.71 million shares on offer, stock exchange data showed. The public issue was subscribed 1.21 times at the end of day three.

Institutional buyers bid for 45.85 million shares, or 1.96 times the portion reserved for them.

Insurance behemoth LIC bid for shares worth Rs 200-250 crore, two persons aware of the development said.

That accounts for roughly 46-57% of the total Rs 434 crore that the government aimed to raise through the public issue.

LIC’s participation in the IPO could not be independently ascertained. An email query sent to LIC seeking details on its participation in the public issue did not yield a response at the time of publishing this article.

Foreign portfolio investors did not bid for a single share in the issue, data showed.

High net-worth individuals (HNIs) and corporate bodies bid for just 12.5% of the shares from their quota as IPO financing looked risky considering the weak undertone in the secondary markets.

The BSE’s benchmark Sensex extended intraday losses to close down 1.24% and at its lowest levels in five months. The Nifty ended below 10,000 for the first time since 11 October 2017.

Selling pressure intensified due to heated rhetoric between the US and China over import tariffs sparked fears of a global trade war, Reuters reported.

The portion set aside for retail investors, who cannot individually bid for shares exceeding Rs 2 lakh in value, was covered about 72%. The employee category was subscribed 26% despite a discount offered to retail investors and eligible employees.

The IPO was subscribed 26% on the first day on Wednesday. It picked up pace on the second day on Thursday, with the overall book receiving 64% demand for shares on offer.

The public offer involves a sale of nearly 48.71 million shares, or a 26% stake, by the government in the company. The sale of stake owned by the government will help the company comply with the 25% minimum public holding norm for listed firms.

Midhani joins state-run Bharat Dynamics Ltd and Hindustan Aeronautics Ltd in going to the market in recent weeks. The last two firms’ IPOs sailed through on the final day, with LIC bailing out Hindustan Aeronautics’ issue.

The company had filed for the issue in January and got the regulator’s nod a month later. Midhani is seeking a valuation of Rs 1,686 crore ($260 million) through the IPO at the upper end of the Rs 87-90 price band. Merchant bankers SBI Capital Markets and IDBI Capital are managing the offer.

The firm makes special steel and super alloys, besides being the only maker of titanium alloys in India. Its products have applications in defence, aerospace, power generation, nuclear and other general engineering industries.

Midhani reported a net profit of Rs 27.30 crore for the six months ended in 30 September 2017 and revenues from operations of Rs 208.06 crore. As on 31 January 2018, the company had an order book of Rs 517 crore.

ICICI Securities

The initial public offering of ICICI Securities Ltd saw little demand on the second day given the weakness in the secondary markets.

ICICI Securities’ offering of 44.22 million shares, excluding the anchor allotment, was subscribed 36% as it received bids for 15.95 million shares, stock-exchange data showed.

The portion reserved for institutional buyers was covered about 54%. The quota for high net-worth individuals and corporate bodies was subscribed 5%. The slot for retail investors, who cannot individually bid for shares exceeding Rs 2 lakh in value, was subscribed about 38.5%.

At the end of day one, the IPO was subscribed nearly 30%.

Ahead of the IPO, the stock broking arm of ICICI Bank Ltd had raised Rs 1,717 crore ($263 million) from anchor investors including Singapore state investor Temasek Holdings, Norway’s Government Pension Fund Global and an affiliate of billionaire investor Prem Watsa’s Fairfax Financial Holdings Ltd. The company allotted a tad more than 33 million shares at the upper end of the IPO price band of Rs 519-520 apiece.

Mumbai-based ICICI Securities is seeking a valuation of Rs 16,751 crore ($2.6 billion) through the IPO, as calculated at the top end of the price band. The public issue will close on Monday.

ICICI Bank aims to raise Rs 4,017 crore ($617 million) by selling a total of 77.25 million shares, or a 24% stake. The lender will get three years from the date of listing to bring its stake down to 75% or below to meet the 25% minimum public holding norm.

The stock broking unit will become the fourth group company from ICICI’s stable to float an IPO. ICICI Bank had gone public in 1998. Its arm, ICICI Prudential Life Insurance Co Ltd, went public in September 2016 through a Rs 6,056-crore offering. ICICI Lombard General Insurance Co Ltd went public in September 2017.

ICICI Securities had filed for the IPO on 15 December and received regulatory clearance on 2 February. The company will join listed peers Edelweiss Financial Services, Motilal Oswal Financial Services, IIFL Holdings Ltd and Emkay Global Financial Services Ltd.

ICICI Securities was incorporated in March 1995. It provides institutional and retail broking, merchant banking and advisory services. It also operates ICICIdirect.com, an online broking platform that helps invest in equity, derivatives, currency futures and mutual funds.

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