TeamLease IPO covered 17% on opening day

The initial public offering of staffing services company TeamLease Services Ltd was subscribed 17 per cent on the issue’s first day on Tuesday.

Subscription was led by retail investors, who bid for about 98 per cent of their portion of the issue. Non-institutional investors and qualified institutional buyers didn’t bid at all, stock-exchange data show.

The company has priced its shares in a band of Rs 785-850. The issue is expected to fetch as much as Rs 423 crore at the upper end of the band. This includes up to Rs 150 crore (around $22.6 million) through a fresh issue of shares.

It is the second IPO this year, after that of auto-parts maker Precision Camshafts Ltd.

Ahead of the IPO, the company raised Rs 190 crore (about $28 million) from a clutch of anchor investors. The company allotted 223.9 million shares at Rs 850 each to various domestic mutual funds as well as foreign institutional investors including Goldman Sachs and Merrill Lynch.

Other investors included Emerging Markets Growth Fund Inc, besides entities under Nomura, ICICI Prudential, Reliance Capital, Birla Sun Life, Sundaram MF, HDFC MF, UTI, DSP Blackrock, IDFC and L&T Mutual Fund.

The TeamLease IPO also includes an offer for sale of around 1.5 million shares each by entities related to Gaja Capital and ICICI Venture and of 153,321 shares by the promoters. The selling shareholders will pocket as much as Rs 274 crore from the issue. The issue will close on Thursday.

From the proceeds of the fresh issue, the company plans to use around Rs 80 crore for existing and incremental working capital requirements, Rs 25 crore for acquisitions and other strategic initiatives, and Rs 15 crore for upgrade of IT infrastructure.

TeamLease mainly offers temping services where it provides temporary workforce to its clients in bulk on a contract. This allows clients to hire without adding to their direct employee base. This employment and business model is closely associated with sectors like manufacturing, banking, BPO and retail, among others. However, temping also encompasses senior-level short-term flexi managers. TeamLease also offers permanent staffing services.

IDFC Securities Ltd, Credit Suisse Securities (India) Pvt Ltd and ICICI Securities Ltd are the Book Running Lead Managers to the offer.

For more on the company and the IPO, click here and here for valuations.

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