The public issue from Aavas Financiers Limited just about managed to scrape through and was subscribed on technical grounds as they received subscription which was greater than 90% of the issue size. The company had tapped the capital markets with its fresh issue of Rs 400 crs and an offer for sale of 1,62,49,359 equity shares in a price band of Rs 818-821. The issue had opened on Tuesday the 25th of September and closed on Thursday the 27th of September.

The company had received excellent response from anchor investors who were allotted 63,36,439 equity shares to 34 anchor investors comprising of 60 entities at Rs 1,821. The top allocation had been made to the erstwhile parent of the company A U Small Finance Bank Limited of 6,36,439 equity shares which corresponds to 10.04% of the total issue.

Normally in an IPO one does not get to know what the anchor demand for an issue is. In the case of Aavas they decided to tom-tom the fact that the anchor issue of Rs 520 crs received bids for a billion dollars. This meant that the anchor portion was subscribed almost 14 times. Yet another way of looking at it is the fact that applicants for the anchor portion subscribed for four times the total issue and yet the overall issue remained undersubscribed. Strange are the ways in which the market behaves.

At the end of the day the one fact that remains, is the issue was able to garner response which was way below expectations and remained under subscribed. It would have to reduce the offer for sale portion in terms of number of shares proportionately. Call it the NBFC factor or the housing finance factor, or the pricing factor or the ‘SHRADH’ factor, Aavas failed to fire.

The response from QIB’s was 2.77 times, HNI’s was a mere 0.26 times and Retail a similar 0.25 times. The overall subscription level was just at 0.97 times. There were 87,193 application forms in the retail category which meant that the retail portion was subscribed 0.21 times in terms of forms. Every technically correct applicant would be given full allotment.

With a high-flying issue climbing down many notches, one hopes merchant bankers and promoters take cognizance of the fact that valuations have soared beyond comprehensible levels and need to be tempered. While currently the markets are in a state of flux in general and the NBFC space, sitting back and reflecting on the progress of this issue would do good to all concerned.

Further, with the company and merchant bankers opting to give details of the overall demand for the anchor book being made public, they have set a new level of transparency which is appreciated and would set an example for companies in the future, HOPEFULLY. It should not be a case of where this was used to only talk the market up and does not happen in the future under the garb of lawyers to the issue not permitting. The issue was managed by five merchant bankers and a top legal firm.

Full details of the subscription bucket wise is given below: –