The initial public offer (IPO) of Tara Health Foods has been withdrawn, as poor investor response saw the institutional portion remaining under-subscribed till the closure of the issue on Wednesday. The issue failed to generate investor interest even after the bidding period was extended with a reduced price band.
In 2008, only two issues were withdrawn, those of Emaar MGF and Wockhardt Hospitals.
Tara Health Foods was one of six issues that opened for subscription last week, just days before the new IPO norms (qualified institutional buyers have to pay 100 per cent upfront margins and the shares have to be listed within 12 days of the closure of the issue) kicked in. The other five IPOs – of Jaypee Infratech, SJVN, Mandhana Industries, Tarapur Transformers and Nitesh Estates – saw satisfactory response.
According to National Stock Exchange (NSE) data, the issue was subscribed only 60 per cent till 5 pm on Wednesday, the last day for bidding. The IPO got bids for five million shares, as against 8.5 million shares on offer in the price band of Rs 175 to Rs 185. The issue was earlier scheduled to close on April 30 with a price band of Rs 180 to Rs 190 per share.
More important, the portion reserved for qualified institutional buyers (QIBs) received bids for only 1.75 million shares, as against 3.5 million shares on offer. Since the company came out with a public issue, under Sebi Regulation 26(2), the offering had to be withdrawn if at least 50 per cent of the issue was not subscribed by QIBs.
“The issue is made through the book-building process and the issuer undertakes to allot at least 50 per cent of the net offer to public to qualified institutional buyers and to refund full subscription monies if it fails to make allotment to the qualified institutional buyers,” said the red herring prospectus of the company.
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The portion reserved for retail investors also saw insignificant demand, with bids for a mere 0.32 million shares, as against 3.5 million shares on offer. The high net worth portion, however, was subscribed a little over two times.
Prior to the issue’s opening, the company had managed to bring in two anchor investors — IDFC Premier Equity Fund and Kotak Mahindra UK Ltd A/c Sandstone Capital India Master Fund Ltd — that bought 0.75 million shares each at the lower end of the earlier price band, that is, Rs 180. The company raised a total of Rs 27 crore from these two anchor investors. An entity which was part of the IPO attributed the issue’s failure to increased “uncertainty in global markets and the weak response”.