ICICI Securities Limited which had tapped the capital markets with its offer for sale of 7.72 cr shares in a price band of Rs 519-520 received poor response and was therefore forced to prune the size of offering. Call it an irony but grapevine has it that the rush of the IPO was to save on the long-term tax which would be applicable with effect from 1st April 2018. Whether they would be able to save on the same or not is still debatable, the pruning of the issue by Rs 500 crs more than makes up for the estimated loss that the government coffers would have had.

The DRHP filed in December 2017 had an issue size of 6.44 cr shares which was increased to 7.72 crs in the RHP of March 2018. This clearly shows that the valuation which ICICI Bank was expecting from the market for its subsidiary ICICI Securities Limited has been reduced significantly.

Secondly the brand ICICI Securities Limited has a triple offering in bank, demat and trading account on a highly successful digital platform ICICI Direct.Com. This platform as claimed by the company has 3.9 million operational accounts. Assuming a mere 10% of these account holders chose to subscribe to a minimum lot of 28 shares in the issue of ICICI Securities Limited we are talking of 109.20 lakh shares which would be 1.48 times the Retail bucket.

One wonders why a profit-making company with a strong track record and the franchise of India’s first digital platform did not have the comfort of its own customers. There are enough examples where ICICIC Direct.Com has single handed subscribed to the retail portion of a number of issues. Here they chose to take a simpler way out of allocating 75% to QIB’s, 15% to HNI’s and 10% to retail, in an issue where they have a strong retail base. Surprised at the decision.

To top it they believe that having a battery of merchant bankers will ensure that the QIB portion is done. The anchor book was well subscribed and received with 3.30 cr shares being allocated to 33 anchor investors comprising of 58 entities. After this response the balance of the QIB book was subscribed a mere 1.04 times. For the six merchant bankers put together it is a matter of shame that they could not do this. Secondly if the pricing was wrong and they have reduced it once between December and March, they should have the courage to reduce it further and get the issue subscribed in totality. This dismal performance of 78% subscription for a subsidiary of ICICI Bank is indeed unacceptable. And finally, what is the guarantee that on listing the price of Rs 520 will hold? If it does and tanks who would be responsible?

Shares of Bandhan Bank Limited listed on the BSE and NSE and had a great debut. The company had a listing ceremony at the BSE as well. The company had tapped the capital markets with its simultaneous offer. The company had issued 9,76,63,910 new shares and sold 1,40,50,780 shares through the offer for sale route. The price band was Rs 370-375.

It had earlier allotted 3,57,84,147 shares to 65 anchor investors comprising of 94 entities. The issue was valued at a price earnings multiple of 36.45 to to 36.95 times based on March 2017 earnings of Rs 10.15. The price to book was even more at 9.23 times based on the NAV of Rs 40.60.
The issue was subscribed38.67 times by QIB’s, 13.89 times by HNI’s and 1.20 times by retail. There were 10,81,506 applications received in the issue. On the basis of number of applications received the issue is subscribed 1.03 times in the retail category.
The discovered price on the BSE was Rs 485 while it was Rs 499 on the NSE. The traded volume at the discovered price was 25.47 lakhs at the BSE and 204.55 lakh shares at the NSE. The high of the day was Rs 498.40 on the BSE while it remained the discovered price of Rs 499 on the NSE. The low of the day was an identical Rs 455 on both the BSE and NSE. The close was Rs 477.20 on the BSE and Rs 476.85 on the NSE.

The traded volume was a massive 1049.43 lakh shares which was 93.94% of the IPO size of 1171.14 lakh shares. The delivery volume was 502.27 lakh shares which was 47.86% of the traded volume and 44.96% of the IPO size. Huge by any standard. If one considers the non-anchor portion the traded volume was 138.21% and delivery percentage 66.15%. The weighted average of the day’s trade was Rs 477.74 and Rs 482.06 respectively. The close was Rs 477.20 and Rs 476.85, marginally below the weighted average. The gain, 27.25% on the BSE and 27.16% on the NSE.

While delivery volumes of over 502 lakhs were recorded, there was just one institutional trade reported in the bulk trade. Nomura India bought 83.34 lakh shares on the NSE at an average of Rs 478.76. The issue was expensive and HNI’s lapped it up because there was grey market active. Of the over half a dozen shares open at the same time, this was the only one which had a grey market. The cost of funding for the leveraged investor was about 43 paisa per time or Rs 6 per share. Initial indications suggested that the unofficial market was quoting around 4 times this cost, suggesting that the HNI would make a killing. Indeed, he did and made about 16 times his cost of funding and rounded of 2017-2018 on a great note for himself.

A great start to the listed life of Bandhan Bank Limited. It needs to deliver on numbers quarter after quarter form here on.