Sheela Foam Limited which had tapped the capital markets with its offer for sale to raise Rs 510 crs was subscribed. The price band was Rs 680-730. The issue had received very poor response on the first two days but excellent QIB support saw the overall issue getting oversubscribed on QIB response itself. The last day also saw HNI’s oversubscribe their portion 3.35 times. Retail portion remained undersubscribed and total bids were for 0.44 times the bucket size. The number of applications were 28,552 which on number of applications meant that the issue was subscribed 0.21 times. This effectively meant that the average application size was substantially higher at 40.79 shares per application against the lot size of 20 shares. This meant that the value of each application was Rs 29,779.

The issue is through but promoters and merchant bankers would have to come out with new ideas to get the retail interest back post the demonetisation move effective 8th November. The active grey market which saw applications and shares being traded has ceased to happen. The immediate fallout was the non-settlement of accounts of PNB Housing issue. This has caused a complete stoppage of any new transactions and brought the grey market to a standstill position.

Going forward until things normalise, issues tapping the capital markets would have to keep in mind that the issue would have to be subscribed on the strength of QIB’s alone. HNI’s would not be able to borrow as NBFC’s would not lend without a grey market. The cycle would be vicious and therefore the only alternative would be to get the issue subscribed 3-4 times from QIB’s and romp home safely.

Let us see how things pan out in the future, but for now Sheela Foam Limited is through.