IndiGo IPO off to strong start, subscribed 80%

Including anchor book, the issue has been subscribed nearly 90%

The IPO, which opened for subscription today, had received over 23.7 million bids as of 3 p.m., data provided by stock exchanges showed. Bulk of the bids so far have come from institutional investors.  

On Monday, the New Delhi-based company raised Rs 832 crore from 43 anchor investors. InterGlobe allotted 10.88 million shares at Rs 765 apiece, the top-end of the price band. The IPO will comprise of around 19.24 million shares, which will be sold a price range of Rs 700-Rs765 per share. 

The anchor investors included marquee foreign institutional investors like US-based asset management company Fidelity, sovereign wealth fund Government of Singapore and US-based investment bank Goldman Sachs. Domestic institutions included HDFC AMC, DSP Blackrock Mutual Fund and Sundaram Mutual Fund. 

At the top end of the price band of Rs 765, InterGlobe will be valued at around Rs 27,000 crore, making it one of the world’s most valuable low-cost carrier.

The issue comprises of fresh equity component of around Rs 1,272 crore, which will be used for retirement of debt and purchase of ground equipment. The remaining issue is offer for sale by owners.

IndiGo had a debt of about Rs 3,912 crore at end of June quarter, all of which is related to aircraft acquisition.

Even though market players have raised concerns over the IPO pricing, IndiGo said the valuations sought were not steep in comparison with other well-run airlines abroad. 

The airline has also come under fire with several analysts and experts questioning the generous dividend payout to the promoters, especially before the run up to the share sale. However, the airline management defended its policy and said the investors were unfazed by the dividend payout.

The InterGlobe IPO is being managed by Citigroup Global Markets, JP Morgan, Morgan Stanley, Barclays Bank, Kotak Mahindra Capital and UBS Securities.