Dinesh Engineers Limited had tapped the capital markets with its fresh issue of 1 cr shares in a price band of Rs 183-185. The issue was open between Friday the 28th of September and Wednesday the 3rd of October. The company had kept the option to have anchor investors, but on the day chosen for the same, decided to opt out of it. Considering that markets were in a bad shape one wonders why the issue was opened in the first place.
This issue was lead-managed by Hem Securities Limited. This was probably their first issue on the main board, or to be on the safer side, an issue on the main board from them after a very long time. Hem Securities has been doing very well in the SME segment and is one amongst the top three merchant bankers in this segment.
The company chose to open its issue on the last day of the half year as their document had financial numbers for the year ended March 2018. To choose not to provide audited numbers for the later period say June 2018, they took a monumental risk with the issue considering market conditions where the BSESENSEX has lost 4.000 points in a span of four weeks. The outcome could only be one – Suicidal and that is exactly what happened. The issue bombed big time.
QIB portion which is mandatory for any issue received no bids. 50 lac shares had to be subscribed in this category and there was no bid. No spill over from other segments is allowed into the shortage if any of QIB subscription. Why the banker chose to open the issue in the first place is a mystery to me and the market as well. The response from the other two segments was no different. There were bids for a mere 4.54 lac shares in the HNI category against a bucket size of 15 lac shares. Retail was even worse with bids for 3.51 lakh shares against a bucket size of 35 lacs. The final tally was 8.06 lakh shares for an IPO of 100 lakh shares.
Company informed the exchange that the issue stood withdrawn. They stated that “looking at the volatile market conditions and prevailing market sentiment on the IPO, the comp-any in consultation with the BRLM has decided to withdraw the IPO.
This hasty decision of launching the IPO would cost the company dearly in terms of existing business as well. This is a setback for the company, the merchant banker and the primary markets. Coming as it did after a couple of issues which struggled and with one of them having to extend the closing date, this was probably the last straw on the camel’s back. One wonders whether what happened could have been avoided.
