This is one of the few IPOs to be oversubscribed in the retail category this year.
The initial public offer (IPO) of DB Corp, the publisher of Dainik Bhaskar, has got the best reponse among all IPOs launched this year. Data from the National Stock Exchange show the Rs 385-crore IPO, which closed today, was subscribed nearly 40 times.
DB Corp received bids for 582.93 million shares as against 14.9 million shares on offer. The qualified institutional buyer portion was subscribed 68 times while the portion for high net worth individuals (HNIs) was subscribed 26 times. The portion for retail investors, which in some recent IPOs was under-subscribed, was subscribed nearly three times.
Market players said the subscription got a boost after the recent success of the Cox and Kings IPO. In the grey market, where punters take leveraged positions and transactions are only on brokers’ books, the IPO was quoting at a premium of Rs 12-13 to the issue price. This means punters are betting that the issue will list at least at Rs 225. The price band was Rs 185-212.
“There were three things that contributed to the high subscription. The company has a proven track record, the sector to which it belongs is unique, and pricing was proper,” said S Ramesh, chief operating officer at Kotak Mahindra Capital.
“DB Corp-published newspapers have a dominant market share in Gujarat and Rajasthan and that is where a majority of retail investors are based. So, the retail subscription is not a surprise given that the brand is well known in these regions,” said S Subramanian, head of investment banking at Enam Securities.
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The retail portions of IPOs by JSW Energy, Godrej Properties, MBL Infrastructure, DEN Networks and Raj Oil Mills were under-subscribed. JSW Energy and Godrej Properties did not see full subscription even in the HNI category.
DB Corp received a commitment of Rs 69.36 crore from nine anchor investors.
| FACT-FILE IPO response in 2009 | ||
| Company | IPO (Rs cr) | Overall subscription |
| Edserve Softsystems | 24 | 1.30 |
| Mahindra Holiday & Resorts India | 278 | 9.80 |
| Excel Infoways | 48 | 1.97 |
| Raj Oil Mills | 114 | 1.15 |
| NHPC | 6,039 | 23.74 |
| Jindal Cotex | 84 | 2.20 |
| Globus Spirits | 75 | 1.50 |
| Oil India | 2,777 | 30.82 |
| Pipavav Shipyard | 513 | 8.25 |
| Euro Multivision | 66 | 1.81 |
| Thinksoft Global Services | 46 | 2.57 |
| Indiabulls Power | 1,529 | 21.84 |
| DEN Networks | 390 | 1.04 |
| Astec Lifesciences | 62 | 1.56 |
| Cox and Kings (India) | 610 | 6.31 |
| MBL Infrastructure | 103 | 1.97 |
| JSW Energy | 2,700 | 1.68 |
| Godrej Properties | 462 | 4.00 |
| Note: DB Corp IPO is ongoing | ||
The issue constitutes about 10 per cent of the fully-diluted post-issue capital of the company.
About 7 per cent of the issue was fresh offering while the remaining 3 per cent constituted an offer for sale by Cliffrose Investment Ltd, an affiliate of private equity agecny Warburg Pincus.
In late 2007, DB Corp, which publishes Dainik Bhaskar, Divya Bhaskar and Saurashtra Bhaskar newspapers, filed an offer document to raise Rs 660 crore by issuing shares for Rs 350 each. But the IPO was put on hold as the markets crashed soon after.
Now, DB Corp may still emerge as the most valued listed media player if the IPO is priced at the upper band of Rs 212 per share. At this level, DB Corp’s market capitalisation works out to Rs 3,848 crore, compared with Deccan Chronicle’s Rs 3,778 crore, Jagran Prakashan’s Rs 3,777 crore and HT Media’s Rs 3,357 crore. At the lower band of Rs 185, DB’s market cap works out to Rs 3,358 crore, almost on a par with HT Media.