Bandhan Bank's Rs 45-bn IPO subscribed 14.6 times on last day of offer

Bandhan Bank's initial public offering (IPO), one of the biggest by a domestic bank, saw over 14 times demand the shares on offer. Despite weak secondary market conditions, the offering generated demand worth Rs 245 billion as against Rs 31 billion worth of shares on offer.

The Kolkata-based lender had already raised Rs 13.4 billion for its Rs 45-billion IPO from anchor investors. Bulk of the demand in the IPO came from institutional investors. The so-called qualified institutional buyer (QIB) portion of the issue was subscribed 39 times. The non-institutional investor portion, commonly referred to as high-networth individual (HNI) quota, was subscribed 14 times, with most of the bids in the segment coming from 'corporates'. The retail portion, however, failed to garner much demand with the portion seeing just 1.2 times subscription.

The microfinance-focused bank IPO comprised of fresh fundraising worth Rs 37 billion and secondary share sale worth Rs 8 billion by the International Finance Corporation (IFC), an investment arm of the World Bank.

The price band for the IPO has been fixed at Rs 370 to Rs 375 per share. At the top end of the price band, Bandhan Bank will be valued at nearly Rs 450 billion, making it the eight most valuable bank in the country.

There has been a huge demand for the IPO despite the lender asking for steep valuations compared to other private sector peers. At the top-end of the price band, Bandhan Bank is valued at more than four times its price-to-book ratio.

Most analysts have given a thumb's up to the IPO given the lender's focus on underbanked and underpenetrated markets. Bandhan Bank's consistent track record, low-cost model and high margins warranted a premium, analysts said.