Cairn IPO scrapes through

40% of institutions walk away from issue.

Over 40 per cent of the institutional bidders backed out of Cairn India's initial public offering (IPO) on the last day of the issue but the Rs 6,247 crore IPO scraped through with 1.1 times subscription.

Institutional investors applied for 441.9 million shares on the penultimate day of the issue but withdrew applications for nearly 180 million shares on the final day.

The subscription by qualified institutional bidders was reported at 2.24 times yesterday but went down to 1.33 times at the close of the issue today. The total subscription was 1.31 times of the issue size on the first day, but finally closed at 1.1 times.

Merchant bankers said the retail portion of the issue was subscribed 90 per cent while the high net worth individuals portion was subscribed only 42 per cent. The unsubscribed portions will now be allotted to the qualified institutional bidders.

The successful float means that Rahul Dhir, Cairn's CEO, will take home stock options worth Rs 30 crore.

This is part of the Rs 100 crore stock options that were a part of the compensation package.

Market sources pointed out that the volatility in the market scared away quite a few of the FIIs.

The other reason, they said, was the timing. "The issue was wrongly timed. Foreign funds do not like large fresh exposures towards the fag end of the year," a market source said.

The public float became embroiled in controversy just before the float with Oil and Natural Gas Corporation, Cairn's partner in Rajasthan, dragging the company to the market regulator, Securities and Exchange Board of India, complaining that its subsidiary, Mangalore Refinery and Petrochemicals Ltd, did not bear the sole responsibility for ensuring midstream development (pipeline for the transport of crude oil).

MRPL is the government nominee for the offtake of crude oil from Rajasthan.