 "Healthcare floats draw strong investor response")
The initial public offerings (IPOs) by two firms operating in the country's burgeoning healthcare sector drew strong response from investors on Thursday.
Alkem Laboratories, the country's leading pharmaceutical firm, and Dr Lal, a leading medical diagnostics chain operator, saw bids worth around Rs 57,000 crore as against less than Rs 2,000 crore on offer.
Alkem's and Dr Lal's IPO size was Rs 1,350 crore and Rs 630 crore respectively at the top end of the price band. Both issues were offer for sale from existing shareholders and didn't involve issue of fresh shares.
The IPOs saw robust demand from all investor segments, in contrast with recent marquee offerings of InterGlobe Aviation and Coffee Day Enterprises, which was given a miss by retail investors.
Alkem's 9-million share offering was subscribed 57 times in the qualified institutional buyer (QIB) category, 130 times in the high networth individual (HNI) segment and nearly three times in the retail portion. Meanwhile, Dr Lal's 8.1-million share offering on the other hand saw its QIB portion getting subscribed 63 times, HNI segment 61 times and retail nearly four times.
"We saw strong participation both from foreign as well as domestic investors. Investors were attracted towards Dr Lal's unique story and consumer focus," said V Jayashankar, head of equity capital market, Kotak Investment Banking.
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Citigroup Global Markets and Kotak Mahindra Capital Company managed Dr Lal IPO. Alkem IPO was managed by Nomura, Axis Capital, JP Morgan and Edelweiss Financial Services.
"The strong response was seen as money was to be made on these IPOs," said S Subramanian, managing director & head of investment banking, Axis Capital. "Both the companies are leading players in segments they operate in."
Alkem with a 3.6 per cent market share is the country's fifth largest pharmaceutical company by domestic sales. Dr Lal with a 12 per cent market share too is among the top two diagnostic company in the country.
Experts said investors in the IPOs were betting on increase in demand for healthcare services on the back of rising incomes in the country.
The strong demand for the IPOs came despite weakness in the secondary market due to sell-off by overseas investors ahead of next week's US Federal Reserve meet, where it is widely expected to increase rates.
Brokers said the recent correction failed to make a dent for the two IPOs as they operate in the healthcare segment, which has been an outperformer in the latest market fall.
The BSE healthcare index is down around 2 per cent as against a 3.5 per cent decline in the benchmark Sensex this month.
Fund raising through IPOs this year has exceed Rs 11,000 crore, around nine times more than Rs 1,330 crore raised last year. Equity capital raising has been strong despite the benchmark indices declining nearly 8 per cent so far in 2015.
"Given the IPO pipeline, we could exceed the amount raised this year through IPOs," said Jayshankar.
Another healthcare sector company Narayana Hrudayalaya plans to launch its Rs 613-crore IPO next week.