Claris Lifesciences Limited which had tapped the capital markets with its IPO to raise Rs 300 crs in a price band of Rs 278-293 failed to get the required support and has been extended. The company had allotted 18.43 lakh shares at the top end of the price band of Rs 293 to four anchor investors.
The new price band will now be Rs 228-235 and the issue will close on Thursday 2nd December 2010. The issue size in terms of number of shares would change as the issue is for a fixed size of Rs 300 crs and the number of shares would increase accordingly. The new size of issue would be as follows: –
Size of Issue: Rs 300 crs
Price band Rs 328-335
Issue in number of shares 1,07,89,473 at lower band of Rs 228 to 1,05,57,941 shares at the upper band of Rs 235.
The issue received support only from the retail investors and their reservation was subscribed 1.22 times. The QIB portion was subscribed a mere 0.15 times and the HNI portion even less at 0.10 times. The overall subscription was 0.44 times.
Readers would recall that I had mentioned there are too many concerns in this issue and therefore this issue should be avoided. The sharp reduction in price of the maximum 20% raises two questions in the mind of investors. The first one is that if the price to be offered could be Rs 228-235 why was the price not offered in the first place itself? Secondly what is it that retail investors know which QIB’s and HNI’s are not aware? The answers to these two questions would clear the mystery about why retail alone was positive.
The financials were never a cause of concern and it does not make much of a difference that the price has been reduced. The key concerns which were about the company’s administration, their being put on the watch list by USFDA and corporate governance issues are more than enough to dissuade any serious investor.
I maintain my stand that this issue should be avoided.
