On the last day of it’s IPO, Equitas received bids for more than Rs 28,000 Crores which resulted in an over-subscription of 17 times. The IPO which opened on 5th April closed today afternoon with orders for more than 247 Crore shares.
Earlier this week the IPO began with a subdued start garnering only 0.10 subscription on Day 1 followed by a demand of 0.38 times on Day 2. The Day 3 subscription details which emerged just now would have taken all investors by surprise causing heartburn among retail investors who stayed away from the IPO. With such a high demand for the stock of Equitas, investors can look forward to a blockbuster listing in the coming weeks.
Traders with an ear on the grey market have reported that the stock is commanding a grey market premium in the range of 10-15%. This means the share could list above Rs 125 in the third week of April. Retail over subscription was low at just 1.26 times, while the portion reserved for HNI’s was oversubscribed 57 times indicating a strong appetite. The share of Institutional Investors saw a cumulative demand of 15 times.
Non Resident Indian investors and Foreign Institutional Investors cannot subscribe to this issue because RBI guidelines require banks to have a foreign share holding of less than 49% . In the case of Equitas, foreign shareholding was higher than 90% and this IPO was done mainly to reduce it. There is a possibility that HNI’s will get only a fraction of the shares they applied for and as a result many of them could end up buying it from the open market on listing day.
Sequoia Brand carries the day.
Sequoia is one of the largest investors in Equitas and it’s name alone is sufficient for investors to line up. The successful conclusion of this issue indicates that there is a great demand for shares of high quality NBFC’s in India. Allotment ratio is expected to be favorable for retail investors and most of them can expect to get full allotment. To check your allotment status for Equitas IPO visit http://kosmic.karvy.com
This over subscription will have a positive impact on the share prices of SKS Microfinance, SE Investments and Arman Financial Services Ltd which are the only other listed microfinance companies in India. You can also expect the share prices of these peer companies to rise steadily until the shares of Equitas list on the stock exchanges.