IndiGo's IPO over-subscribed 1.55 times on second day: Here's why it really matters

Mumbai - InterGlobe Aviation's Rs 3,018-crore initial public offer, the biggest in nearly three years, was over-subscribed by 1.55 times on the second day of bidding on Wednesday. The issue is considered successful by many.

Here are 10 things you need to know about the share offer:

 IndiGos IPO over-subscribed 1.55 times on second day: Heres why it really matters


1) The IPO generated demand worth over Rs 4,000 crore, as it received bids for 4,67,45,535 shares against total issue size of 3,01,22,088 shares, taking the overall subscription to 1.55 times.

2) The quota reserved for qualified institutional buyers (QIBs) saw overwhelming response with over-subscription of 5.15 times. The portion reserved for retail investors witnessed 19 percent subscription and non-institutional investors category was subscribed 4 percent,  data showed. What this means is that the retail investors haven't taken a fancy for the IPO.

3) The success of the IndiGo IPO seems to have infused confidence in its peer GoAir to tap the market for funds too. According to a PTI report citing sources, the Wadia Group-promoted budget carrier is now planning to go for an initial public offering in the current fiscal. A Reuters report cites sources as saying that the company is likely to raise $150 million through the issue.

4) Aviation think-tank Centre for Asia Pacific Aviation has said the offer, valuing InterGlobe Aviation at over $4 billion, is a significant milestone for Indian aviation sector that has been grappling with adverse conditions over many years.

5) The carrier's success is more valuable as the market conditions over last 9-10 years have been extremely adverse. "IndiGo's valuation also reflects a very strong confidence in the India's aviation story especially with massive growth upside for next 3-4 decades," CAPA said. It expects the IPO to "structurally re-rate the sector".

6) The company's raising of a whopping Rs 832 crore from anchor investors a day before the launch of the IPO also seems to have improved the sentiment for it. According to a report in the Business Standard, this is the highest amount raised by an Indian company through this route.

7) The company allotted a little over 1.08 crore shares at the upper limit of price band at Rs 765 apiece to more than 40 anchor investors, including the Singapore government, Monetary Authority of Singapore, Goldman Sachs India Fund, Abu Dhabi Investment Council - Tallyfish, Indus India Fund (Mauritius) Ltd, Kuwait Investment Authority Fund 224, Credit Suisse Singapore Ltd and Sundaram Mutual Fund.

8) The offer, which closes today, comprised fresh issue of shares worth Rs 1,272.2 crore and the revised Offer for Sale (OFS) size that was about Rs 1,746 crore.

9) The company had reduced its initial share sale size to a little over Rs 3,000 crore last week, with three of the promoters deciding to sell fewer shares than proposed earlier.

10) The company's pay out of huge dividend to promoters ahead of the IPO had kicked off a controversy with many analysts alleging that the move amounted to emptying the company's coffers before the IPO and leaving nothing for the investors. The move pushed IndiGo's net worth into a negative Rs 136 crore. However, IndiGo president and whole-time director Aditya Ghosh brushed aside the controversy saying the negative net worth figure equals just 20 days' profit for the company.

With inputs from PTI

Updated Date: Oct 29, 2015 09:14:57 IST