The $634 million IPO from IRFC subscribed 3 times by the end of bidding

The $634 million IPO from IRFC subscribed 3 times by the end of bidding
BCCL
  • The ₹4,634 crore (about $634 million) share sale concluded with the subscription of little over 3 times the offer value.
  • The government-owned company received bids for 424.8 crore equity shares against the offered size of 1.24 crore equity shares.
  • The basis of allotment for ₹4,634 crore initial public offering of IRFC will be announced on January 25.
The initial public offer of the borrowing arm for the Indian Railways, IRFC clocked in a decent response from investors on the last day of subscription. The ₹4,634 crore (about $634 million) share sale concluded with the subscription of little over 3 times the offer value.

This was the first initial public offer this year and the first-ever IPO by a non-banking financial company in the public sector. According to data from the stock-exchanges, the issue from the government-owned company received bids for 428 crore equity shares against the offered size of 1.24 crore equity shares.

IRFC IPOQualified Institutional BuyerNon-institutional InvestorRetail Individual InvestorEmployee Total
Offer size356 million 267 million623 million192 thousand 1.247 billion
No. of times issue subscribed 3.57x1.61x3.43x39.53x3.09x

The qualified institutional buyer's portion was subscribed 3.6 times, and the retail investors supported the issue with a subscription of 3.4 times.
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In its anchor book opening, the company raised nearly ₹1,389 crore by allocating shares to HDFC Equity Fund, Government of Singapore, Nippon India Tax Savers Fund, among others.

Despite all the top brokerages recommending to ‘subscribe’ to the issue citing various factors from strong valuation to robust business growth — the unlisted shares saw a tepid response in the grey market. The premium declined from 7% on day one to 5% today. The shares in the grey market were commanding a premium of ₹1.10-1.20, over the issue price band of ₹25-26 per share.

The analysts believe that the IPO was attractively priced and can offer a good investment opportunity for the investors in the long term. A Kotak Securities IPO report noted that the company has a significantly low client-risk profile, and no asset quality concerns and as of September 2020, it did not have any non-performing assets.
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What’s next?

The basis of allotment for ₹4,634 crore initial public offering of IRFC will be announced on January 25, and listing is scheduled for January 29. The equity shares will be listed on both the exchanges — BSE and NSE.

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