IndiGo IPO subscribed 86% on Day-1

Institutional investor segment sees nearly three times demand

The Rs 3,000-crore initial public offering (IPO) of InterGlobe Aviation, which operates IndiGo, has got off to a good start. On the first day, the 39.5-million share offering was subscribed 86 per cent.

The IPO, the biggest since December 2012, closes on Thursday.

On Tuesday, most bids were from institutional investors. The retail and high net worth individual (HNI) categories recorded few bids. According to provisional data provided by stock exchanges, in the qualified institutional buyer segment, the demand was about three times number of shares on offer. The retail and non-institutional investor categories were subscribed 5.2 per cent and two per cent, respectively.

  On Monday, InterGlobe had raised Rs 832 crore from anchor investors by allotting 10.88 million shares at Rs 765 apiece. Including the anchor portion, the issue has been subscribed 94 per cent.

Market players said the IPO received an encouraging response, despite analysts’ apprehensions on rich valuations, negative net worth (as on June) and the company’s dividend policy.

Typically, most investors apply on the last day of an IPO.

Institutional investors who subscribed to the IPO under the anchor category included Fidelity, the government of Singapore, Goldman Sachs, HDFC AMC and Sundaram Mutual Fund.

For the IPO, InterGlobe has fixed a price band of Rs 700-765 a share. At the top end of the band, InterGlobe will be valued at about Rs 27,000 crore, making it the world’s fifth-most valuable low-cost carrier.

The InterGlobe IPO comprises a fresh equity component of about Rs 1,272 crore, which will be used for retirement of debt and purchase of ground equipment. The remaining issue will be accounted for by an offer for sale by the owners.

The InterGlobe IPO is being managed by Citigroup Global Markets, JP Morgan, Morgan Stanley, Barclays Bank, Kotak Mahindra Capital and UBS Securities.