Bharti Infratel Limited (BIL) which had tapped the capital markets with a fresh issue of 14.62 cr shares and an offer for sale of 4.26 cr shares in a price band of Rs 210-240 managed to get its issue subscribed due to oversubscription from the QIB category. The issue had opened on Tuesday the 11th December and closed for bidding for HNI’s and retail investors on Friday the 14th of December. Retail investors would be entitled to a discount of Rs 10 per share. The issue which had garnered an overall support of 1.21 times after the QIB bids closed inched up to 1.30 times.

The issue subscription needs to be closely looked at. In any issue half the total issue size is reserved for non-institutional investors with 35% reserved for retail and 15% for the HNI’s. The success of an issue is gauged from subscription not only from the QIB category but also combined from these categories. The non-institutional category had received combined bids of 66.73 lac shares at the end of day 3 when QIB bidding ended. Even after seeing that the overall book is subscribed by QIB alone and there would be no problem as far as the issue going through is concerned, the book did not get subscription for more than 21.77% of the reserved category for HNI’s and retail. The total subscription from this category on the fourth day or extra day reserved for this category was 138.89 lac shares. The overall subscription in this category trebled but still fell far short of the required subscription. In the past two issues from CARE and PCJ, one saw huge response coming in from these two categories and they have matched the QIB bidders.

One must also remember that there was a Rs 10 per share discount for retail investors. What is even more interesting is that there were as many as 13 Investment bankers and three syndicate members who were not common with the merchant bankers, as part of the fund raising exercise. What went wrong? The issue was expensive and no efforts were made to explain to retail investors why they should put their money in this issue. The proof of the pudding is in the eating and the subscription data shows that retail and HNI’s have simply ignored the issue.

The issue would garner between Rs 3,967 crs at the lower end of the price band to Rs 4,534 crs at the top end of the price band. The issue is likely to be priced at Rs 230 which was the anchor allocation price unless the management becomes considerate and magnanimous and offers a further reduction looking at the poor non-institutional support.

The details of the subscription level in various categories are given below: –