IndiGo IPO gets full subscription on second day, retail investors stay away

The IPO of InterGlobe Aviation – the parent of India’s largest airline company IndiGo – continued to attract institutional buyers on the second day. According to the combined data available from BSE and NSE, IndiGo IPO received bids for 46.74 million shares on the second day of subscription, marking full subscription. After allotting 10.88 million shares to anchor investors a day before the IPO, InterGlobe Aviation is selling 30.1 million shares through the public offer.  Singapore government-owned GIC, Goldman Sachs, Merrill Lynch, Ruane, Cunniff & Goldfarb, HDFC AMC, Sundaram Mutual Fund, DSP Blackrock Mutual Fund and Fidelity Investments were among the anchor investors.

IndiGo IPOHowever, a closer look at the subscription figures reveal that the demand is largely fuelled by QIB investors while retail and high net worth investors are staying away from the hyped IPO. QIBs placed bids for 43.88 million shares, resulting in subscription of 5.15 times but retail investors continued to give the IPO a miss with just bids received for only 2.5 million shares against 13.58 million shares. It is not only retail investors who are shying away from the IPO as all other categories also received poor demand.

Subscription in the NII category – aka high net worth investors – remained at just 4% with just one more day to go. Similarly, company employee portion was subscribed just 4% on the second day.

InterGlobe Aviation IPO Bidding (as on 28 October 2015)
S. No.CategoryNo. of shares offeredNo. of shares bid forSubscription No. of times
1Qualified Institutional Buyers (QIBs)8,522,93543,888,5755.15
2Non Institutional Investors5,819,746254,8500.04
3Retail Individual Investors (RIIs)13,579,4072,513,7600.19
4Employees2,200,00088,3500.04
Total30,122,08846,745,5351.55

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While the IPO generally received positive recommendations from analysts, some concerns were raised over the interim dividend payment which left the company’s net worth in negative territory. Given the strong contribution from the QIBs, the IPO will likely sail through but the absence of every other investor class shows that this is another instance of lofty IPO valuations and the tendency of promoters to not leave anything on the table for small investors.

Krishna Bagra

Coming from a family of investors and financial analysts, Krishna learnt wading through regulatory filings pretty early in her career. At IPO Central, Krishna plays twin roles of contributor and head of research desk. She can also be reached at +krishnabagra .

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