Newgen Software Technologies Limited – Completes Anchor Allocation

Newgen Software Technologies Limited which is tapping the capital markets with its simultaneous offer completed allocation to anchor investors. The company allotted 51,99,444 equity shares to nine anchor investors comprising of 12 entities. The highest allocation was done to Goldman Sachs and HDFC asset management company. They were allotted 10,20,469 shares each which corresponds to 19.63% of the anchor allocation to each.

The issue comprises of an offer for sale 1.34 cr shares and a fresh issue for Rs 95 crs. The issue is priced in a band of Rs 240-245 and has opened on Tuesday the 16th of January and would close on Thursday the 18th of January.

The PE multiple at which the shares are being offered is 22.79-23.27 times. The company is a product company in the ECM, BPM and CCM space. In layman’s language it is about documents and digitisation and is a growing business.

Full details of the anchor allotment are given below: –
anchor-investor-allocation-newgen

Disbelievers Fuelling Rally

Markets continued to be on a roll and were up for the second week of calendar year 2018. The momentum is intact and the people who disbelief the rally seems to be rising. As long as these disbelievers exist, the rally would continue to gather steam and keep on rolling. The pace could falter and also chug along. These disbelievers are the people who short the market and provide fodder for the bulls to feed on.

The BSESENSEX gained 438.54 points or 1.27% to close at 34,592.39 points while NIFTY gained 122.40 points or 1.15% to close at 10,681.25 points. Dow Jones gained 507.32 points or 1.97% to close at 25,803.19 points.

IDFC Bank and Capital First have announced a merger. Shareholders of Capital First would be given 13.9 shares for every share of Capital First held by them in IDFC Bank. The earlier plan to merge IDFC Bank with Shriram Transport Finance had fallen through and this is the second attempt by IDFC Bank to enter into an alliance.

The primary market continues to be posting crazy subscription levels, the like of which have never been witnessed. The issue from Apollo Micro Systems Limited was subscribed a massive 248.5 times. Non-institutional portion or HNI category was subscribed 958 times. The cost of funding at this level is more than the issue price. This kind of response puts more pressure on the company to perform as suddenly the expectation zoom. Whether they are able to achieve the same or not is another story.

There are two primary market offering in the coming week. The first is an issue from Newgen Software Technologies Limited which is tapping the capital market with its offer for sale 1.34 cr shares and a fresh issue for Rs 95 crs. The issue priced in a band of Rs 240-245 would open on Tuesday the 16th of January and close on Thursday the 18th of January. The PE multiple at which the shares are being offered is 22.79-23.27 times. The company is a product company in the ECM, BPM and CCM space. In layman’s language it is about documents and digitisation and is a growing business. The issue is that product companies have not made money for investors in a long time and whether Newgen would be an exception or not, only time will tell.

The second issue is from contract manufacturer of white goods maker Amber Enterprises Limited. The company is tapping the capital markets with its issue to raise Rs 600 crs in a price band of Rs 855 to 859. The issue comprises of a fresh offer for Rs 475 crs and an offer for sale of Rs 125 crs. The shares are being offered at a PE multiple of 61.91 to 62.20 times based on its March 2017 results. The share is priced keeping in mind the response that Dixon Technologies had received and the success of the same. There is one difference that the share appreciated post listing and made huge money for the investors. The share was issued at a price of Rs 1,766 and after four months of trading is at Rs 3,842, a gain of over 117%. One needs to look at this asking price a little carefully and not get carried away with HNI leveraged subscriptions. One needs to know that Dixon did well post listing and Amber wants the valuation that Dixon enjoys at IPI time. Tough call whether they would get the response which the former got.

Markets are on a roll helped by two factors; firstly, the rally in Dow Jones and global cues and secondly disbelief in our markets. Liquidity is an added booster and thigs seem to be moving in favour of bulls. While they have the upper hand currently, I need to be cautious and invest only in quality stocks.

Apollo Micro Systems Limited – Subscribed Over 248 Times

The primary offering from Apollo Micro Systems Limited was subscribed over 248 times. The company had launched its primary issue to raise Rs 156 crs in a price band of Rs 250-275. It had earlier allotted 16,96,050 shares to 3 anchor investors comprising of 4 entities. The largest allotment of 8,48,000 equity shares which is 50% of the anchor allotment was made to 2 entities of Sundaram Mutual Fund.
apollo-micro-systems
The issue was open between Wednesday the 10th of January and Friday the 12th of January. The issue received excellent response from all buckets but it was the HNI or non-institutional portion which has created history. The portion was subscribed a record 958.07 times. The cost of funding at this level is more than the issue price. The QIB portion was subscribed 101.93 times, HNI Portion 958.07 times, Retail portion 40.19 times and employee portion 16.94 times. The overall issue was subscribed 248.51 times. An issue which was looking to raise Rs 156 crs has garnered close to Rs 28,500 crs. Talk about liquidity in the market place. Things are becoming crazy.

Apollo Micro System Subscription

Bucket Size Shares Applied for Times Oversubscribed
QIB 1151875 117406000 101.93
HNI 863800 827579050 958.07
Retail 2109280 84766500 40.19
Employee 20000 320700 16.04
Total 4144955 1030072250 248.51
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