Air Deccan extends IPO, cuts price

Deccan Aviation, which runs low-cost carrier Air Deccan, today extended its initial public offering (IPO) by three days and pared the lower limit of the price band by Rs 4.

The book-built issue with an original price band of Rs 150-175 was slated to close today. The new price band is Rs 146-175. This is the first instance of a price cut in a book-built public issue and extension of closing day.

"Possibly, this is the first example of a delayed closing of a public float," said an investment banker.

Deccan Aviation Managing Director GR Gopinath told Business Standard the intention of the twin moves was to provide opportunity to the investors who were caught in the market mayhem in the past one week and could not participate in the issue.

"The issue was 1.06 times subscribed at the end of today. However, a lot of institutional investors told the merchant bankers that they could not focus on the issue as they were too preoccupied with the market slide. The company decided to provide them an opportunity to invest in the issue.

The price band was revised as it is mandatory under the Securities and Exchange Board of India rules if a corporate entity wanted to extend the closing date, merchant banking sources said.

They added that all the categories of the issue were fully subscribed. UTI and LIC were among the prominent institutions that put in bids for the Deccan Aviation stock.

According to the data available on the National Stock Exchange, out of the total issue size of 2.45 crore shares, the company received bids for 2.59 crore shares till late this evening.

However, analysts said the issue failed to evoke huge response from investors due to the company's poor financial condition.

"The loss-making company would break even only after two years. So investors were a bit bearish since the first day of the issue. The carnage in the market aggravated their fears," they added.

Enam Financial Consultants and ICICI Securities are book-running lead managers for the issue and Karvy Computershare Private is the registrar to the issue.

Earlier, SBI Caps, JP Morgan and ABN Amro Rothschild had declined to manage the issue. The equity shares of the company are proposed to be listed on the BSE and NSE.