Stanchart IDR issue sails through on institutional support

The first Indian Depository Receipt (IDR) issue has sailed through despite volatile market conditions witnessed over the past one week....

The first Indian Depository Receipt (IDR) issue has sailed through despite volatile market conditions witnessed over the past one week. Standard Chartered Plc’s fund raising through the IDR issue received an overwhelming response from institutional investors on the final day of the offer.

The issue was subscribed 2.20 times receiving in all bids for 44.90 crore IDRs. While QIB portion was subscribed around 4.1 times,HNI portion was subscribed 1.9 times while retail remain undersubscribed at 0.25 times.

As per the National Stock Exchange data,even the employees portion of the issue remained undersubscribed at 0.19 times. Out of 7.20 crore shares on offer for retail investors,there were bids for only 1.82 crore shares. In the case of employee quota,bids for only 9.50 lakh shares came as against 48 lakh shares on offer.

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The 50 per cent portion reserved for the Qualified Institutional Buyers (QIB) category was subscribed 4.1 times,with majority of the bids coming during the last hour of the issue. “The fact that most applications came in on the last day is not surprising since this is the first transaction where institutions need to pay 100 per cent of the subscription amount rather than 10 per cent. So there is really no incentive for them to bid earlier,” said A Rajagopal,MD and Head of Global Capital Markets for India for UBS.

Of the total bids received under the QIB portion,72 per cent came from FIIs,another 19 per cent from domestic mutual funds while the remaining 9 per cent came from domestic banks and other financial institutions. Senior company officials said that top blue-chip mutual funds had shown keen interest in the issue along with big private and public sector banks and corporates.