Home Market ICICI Securities cuts IPO size after issue saw undersubscription

ICICI Securities cuts IPO size after issue saw undersubscription


NEW DELHI: The Rs 4,017-crore initial public offering (IPO) of ICICI Securities could only manage 78 per cent subscription on the last day of the issue on Monday, data available on NSE showed.

However, including anchor allotment, the issue received a total of 87.9 per cent subscription.

In a statement, the brokerage said that the company has successfully closed its proposed offer for sale (OFS) and has raised around Rs 3,500 crore. Out of this, around Rs 1,717 crore was raised from anchor investors.

The brokerages announcement meant it lowered the issue size to sail through. This is third subsidiary firm from the ICICI group to hit the market in past two years.

The QIB portion was fully subscribed, but the quota for retail investors (88 per cent) and non-institutional investors (33 per cent) remained undersubscribed.

Overall, this was the fourth issue of the ICICI Group after ICICI Bank, ICICI Prudential Life and ICICI Lombard General Insurance.

In case of an IPO, the issuer is required to receive a minimum subscription of 90 per cent of the offer, while in case of an only-OFS issue the minimum subscription is not required. Meanwhile, some reports suggested that the OFS rules allow an issuer to close the issue, in case the company has managed to dilute 10 per cent of the paid-up capital.

At an upper price band of Rs 520, the asking price of ICICI Securities stock was at a PE of 31.55 times on FY18E EPS of Rs16.48, making it fully valued, Asit C Mehta Investment Intermediates had said in a note.

“At the higher end of the price band, the issue is expensively priced at 49.6 times its FY17 earnings and 34.2 times FY17 book value. The business of ISec cannot be exactly compared with other brokerages due to their vast digital footprint that aids maximum revenue for the company compared with other brokerages which are relatively gaining more from branch based business,” Centrum Broking had said in a note.

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