Kishore Biyani may well have tasted success with his annual 'Sabse Sasta' week every January. But, he has certainly not succeeded in selling shares of his company at a price that can certainly be termed 'sasta' when viewed in absolute terms. After institutions gave a thumbs-down to the initial public offer (IPO) of Future Ventures India, it was the turn of the retail investors, who shop at Big Bazaar in large numbers, to skip it.
According to data available on the website of the Bombay Stock Exchange (BSE), the retail segment of the public issue was subscribed only 61 per cent till 6.15 pm on Thursday, the last day for submitting bids. The portion reserved for qualified institutional buyers (QIBs), bidding for which closed on Wednesday, has also remained under-subscribed at 26 per cent.
The price band for the IPO was fixed between Rs 10 and Rs 11. The public issue, however, has managed to sail through with high networth individuals (HNIs) pouring in applications in huge numbers.
According to BSE data, the segment reserved for HNIs has been subscribed 7.81 times, with the overall IPO getting subscribed 1.52 times. In all, bids for 1,137 million shares were received, as against 750 million shares on offer.
The final subscription number, however, will be slightly different from these as the last day typically sees some retail investors submitting applications in the last hour or so. The numbers are not immediately reflected in the data shown by the stock exchange websites.
Interestingly, while the company, in consultation with the investment bankers, offered the shares to public almost at par, market players always sounded sceptical while rating the issue. JM Financial, Enam Securities and Kotak Mahindra Capital were the book running lead managers to the offering.
“Future Ventures looks to invest in new opportunities in the consumption-led sector. Hence there could be a risk of the business venture not performing well or taking time to show positive results. Such businesses are highly capital intensive and require significant gestation periods,” GEPL Capital, which recommended its investors to avoid the issue, had said in an IPO note. “The company has been making losses for the past three financial years which is a concern for prospective shareholders,” it had added.
Future Ventures invests in businesses, which are strategically important to the group's retail business. It plans to use a large part of the funds for acquiring new businesses while approximately Rs 120 crore will be used to grow the existing businesses. This was the first time in recent years that a major business group was offering shares at near par levels. BS database shows that only ten companies have sold IPOs at offer price of less than Rs 20 in the past four years.