State-run MSTC's IPO gets little response on first day
Photo Credit: VCCircle

The initial public offering (IPO) of state-run e-commerce and trading company MSTC Ltd began on a slow note on its first day on Wednesday, with a majority of the bids flowing from retail investors.

The public issue of 17.67 million shares received bids for 0.81 million shares on day one, stock exchange data showed. The book was subscribed 4.5%.

The portion set aside for retail investors, whose bids’ value cannot exceed Rs 2 lakh per application, was subscribed for 7.79 lakh shares or 44% of the 1.76 million shares reserved for them.

Institutional buyers did not bid for a single share on the first day, while non-institutional investors and eligible employees bid for a handful of shares reserved for them, data showed.

Retail investors and MSTC employees will get a discount of Rs 5.50 on the price at which the shares are allotted.

The entire IPO, which will close on Friday, comprises a sale by the central government that set the price band at Rs 121-128 apiece for the public float. The company is aiming at a valuation of as much as Rs 896 crore ($128.73 million) at the upper end of the price band.

The government will raise Rs 225 crore ($32.2 million) as part of its disinvestment drive. After the IPO, the government’s holding will drop to 64.85% from 89.85%, thereby making MSTC compliant with the minimum public shareholding norms for listed companies.

Kolkata-headquartered MSTC had filed its IPO proposal on 1 February. It received regulatory approval on 28 February.

MSTC joins a growing list of state-run companies looking to go public. Other government-owned companies preparing for maiden share sales include Rail Vikas Nigam Ltd and Mazagon Dock Shipbuilders Ltd.

MSTC provides e-commerce-related services across industry segments. It offers e-auction and e-procurement services and develops customised software. It is also a major player in trading of bulk raw material.

Equirus Capital Pvt. Ltd is the sole merchant banker managing the share sale.

MSTC, incorporated in 1964, originally began operations as a trading company to regulate the export of metal scrap. Since then, the company has grown to become a diversified, multi-product services and trading company.

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