The overwhelming response to the initial public offer (IPO) of Mahindra Holidays and Resorts India (MHRIL), which closed today, may well be a signal for the revival of primary market for IPOs in India. The MHRIL issue, which closed today was subscribed nearly 10 times over, as 88 million bids were received for 9.27 million shares.
According to information from investment bankers to the issue, the retail portion was oversubscribed by 3 times, while the high net-worth individual portion and institutional buyers (QIB) portion was subscribed over 10 times.
Recently, the follow-on public offer (FPO) of Rishabhdev Technocable was subscribed over 8 times. The response to both MHRIL and Rishabhdev have raised hopes of more IPOs hitting the market. Apart from government-owned Oil India and NHPC, Adani Power too was aggressively pursuing the IPO route to raise money.
The IPO price band of MHRIL was fixed at Rs 275-325 per share. The size of the issue stood at Rs 301 crore at the upper end of the price band and Rs 255 crore at the lower end. Mahindra & Mahindra (M&M) will hold 83 per cent of MHRIL post dilution of stake and would raise between Rs 90 and Rs 123 crore.
The issue comprises a fresh issue of 5,896,084 equity shares and an offer for sale of 3,369,191 equity shares by M&M. The issue would constitute 11 per cent of the fully diluted post-issue paid-up capital of the company.
The scenario in the primary market was quite lacklustre after the failure of the IPOs of Emmar MGF and Wockhardt Hospital in the beginning of 2008. And market sentiments hit rock bottom after the collapse of Lehman Brothers. However, with stability returning to the secondary market following the success of mega QIPs, smaller companies have chalked out IPO plans after a lull of over six months.
