South Asia Petros Ipo Receives 11 Per Cent Subscription

South Asian Petrochem Ltd (SAPL) appears to have been the latest victim of the sluggish primary market, registering only 11 per cent subscription for the equity portion of the Rs 74.5 crore initial public offer (IPO).

The fully-convertible debenture (FCD) of the simultaneous but unlinked offer has posted a better show by receiving over 42 per cent subscription. The overall subscription -- combination of both equity and FCDs -- of the issue stands at nearly 40 per cent of the total IPO size.

Statistics available from one of the managers to the issue indicate investors have subscribed for 5.49 lakh fully paid up equity shares of Rs 10 each, which represents only 10.99 per cent of the 50 lakh shares on the offer.

The FCD subscription stands at Rs 29.21 crore representing 42.03 per cent of the Rs 69.5 crore on the offer. The IPO received a total subscription of Rs 29.76 crore, which represents 39.94 per cent of the issue size of Rs 74.5 crore.

SAPL -- a joint venture between the city-based Dhunseri group, West Bengal government and Zimmer of Germany -- floated the issue to part finance a 1.4 lakh tonne bottle grade PET resin plant at Haldia in West Bengal. The total cost of the project is expected at Rs 450 crore.

SAPL director C K Dhanuka had earlier told Business Standard that the undersubscribed portion of the issue would devolve on underwriter. He, however, was not available for comment this evening.

The Rs 5 crore equity part of the issue was fully underwritten by SBI Caps (Rs 25 lakh), UTI Bank (Rs 25 lakh), J M Morgan Stanley (Rs 50 lakh), IDBI (Rs 2.5 crore), Exim Bank (Rs 1 crore) and M Prasad & Co (Rs 50 lakh).

The Rs 69.5 crore FCD portion of the offer was 64.03 per cent underwritten by UTI Bank (Rs 5 crore), IDBI (Rs 20 crore), Exim Bank (Rs 12 crore), Canara Bank (Rs 2.5 crore), Punjab National Bank (Rs 3 crore) and United Bank of India (Rs 2 crore).

A city-based primary market operator said even 11 per cent subscription for the equity portion could be treated as a good sign for the primary market.

"Investors are generally not very enthusiastic about projects having long gestation period. Plus, the recent downturn in the primary market restricted them from participating in the issue," he said and added the future trend of the primary market would be largely determined by the Bharti's offer that opened today.