Mahindra IPO Spells Success – US-FOREX.US
MUMBAI -
India’s first public offer in 15 months, from timeshare firm Mahindra Holidays & Resorts, concluded successfully on Friday. The issue of 9.27 million shares received a deluge of 60,000 applications and bids for 90.83 million shares at the end of trading as the Sensex gained 419 points, or 2.9%, to close at 14,765.”We’ve done well,” remarked Mahindra Holidays & Resorts Chairman Arun Nanda, adding that 75% of the book was in the upper part of the 275 rupees to 325 rupees price range of the issuance.The portion for qualified institutions was oversubscribed 12.8 times; for high net-worth investors, 11 times. The response of retail investors was comparatively muted, their portion being subscribed three times. That may have had something to do with the pricing, said analysts. “Mahindra Holidays charged a premium for its unique business model, which institutional investors were willing to pay,” observed Ashok Kumar, founder of ipoguru.com, a portal that tracks new offerings. Mahindra Holidays, part of the 6.7 billion Mahindra conglomerate, is by far the market leader in India’s rapidly growing time-share industry. The company’s IPO, originally scheduled for 2008 and postponed due to a weak stock market, opened Tuesday amid keen anticipation .Success notwithstanding, analysts concurred that it is too soon to conclude that Indian retail investors have rediscovered their appetite for IPOs. “A comeback by retail investors requires a more modestly priced issue,” said Kumar adding that a price band of 210 rupees to 250 rupees would have attracted more retail applications.
The government should take note as it prepares to kick-start a slew of offerings by state-owned enterprises after the federal budget on July 6. Said Kumar: “Premium valuations are justified once the market has picked up.”