Repco Home Finance Limited which had tapped the capital markets with its IPO in a price band of Rs 165-172 was subscribed today on the bourses. The issue managed to get subscribed but not without its fair share of drama. The QIB portion was subscribed late in the afternoon on the closing day and it was oversubscription in this portion that saw the issue managing to garner overall subscription. All other categories of investors whether it is the HNI’s, Retail or employees remained undersubscribed.

The poor response in these categories points to investors not being happy with the price or the issue itself. The anchor investors were marquee without doubt and the business of home finance in India is certainly a promising business with a huge captive demand. If three well known merchant bankers could not get over whelming response for a Government of India Company promoted by a government bank and in a great well established business like home finance, who would?

It appears that the issue was overpriced, subscription from QIB’s came in at the 11th hour and the proposed discount to retail investors in the RHP was cancelled at the last moment. Probably it was the overconfidence of the merchant bankers and the existing shareholders. One must remember the performance of an issue BhartiInfratel which listed in December where the issue managed by 13-14 merchant bankers was fully subscribed by QIB investors alone and received lukewarm response from other categories of investors. The feeling was that retail investors were not capable of deciding or understanding price discovery. The shares were allotted at Rs 220 and closed on Friday the 15th of March at Rs 185.10, a loss of Rs 34.90 or 15.86%.

A similar fate is in store for Repco Home Finance Limited when it lists and is likely to be under tremendous pressure.The details of the subscription level in various categories are given below: