Monte Carlo IPO bought eight times

The category meant for institutional investors was subscribed 14 times.

Monte Carlo Fashions’ Rs 350-crore (Rs 3.5 billion) initial public offering saw eight times more demand than shares on offer.

The 5.4-million share offering by the apparel company received 24.9 million bids worth Rs 15,000 crore (Rs 150 billion).

The category meant for institutional investors was subscribed 14 times.

The retail portion received a subscription of 6.6 times.

But the high networth investor quota was subscribed 1.7 times in contrast to recent IPOs, where they had bid heavily.

Typically, high net-worth investors place bets in IPOs, to cash out on the day of listing.

Shares were priced Rs 630-645 apiece but given the oversubscription, the issue was likely priced at the top end.

Monte Carlo has raised a little above Rs 100 crore (Rs 1 billion) from anchor investors at Rs 645 a share.

Through the IPO, the company’s promoters and private-equity firm Samara Capital are cutting their stakes.

According to analysts, Monte Carlo’s strong balance sheet and asset-light model are a plus.

They say valuations of 22 times (one-year forward earnings estimate) don’t offer much room for an upside. High retail-investor participation followed healthy returns delivered by IPO companies this year.

Monte Carlo was the fifth, and possibly the last, IPO of 2014. The average returns given by the four IPOs that have come this year are a whopping 86 per cent.

Ironically, despite the good investor demand and a sharp rally in the secondary market, few companies have tapped the primary market this year.

Including Monte Carlo, a total of just Rs 1,200 crore (Rs 12 billion) has been raised from the IPO market this year, the lowest figure in more than a decade.

Investment bankers expect next year to be good for the IPO market.

Currently, less than 20 companies have filed their offer documents to the capital markets regulator, Securities and Exchange Board of India. Bankers expect the queue of companies lining up for IPO approvals to get longer.

Manpasand Beverages, Vascon Engineers, Videocon d2h, Rashtriya Ispat Nigam and Sadbhav Infrastructure Project are among those that have filed their IPO documents.

Image: A Monte Carlo outlet; Photograph: Eduardo P/Wikimedia Commons