A debate has started around the investment acumen of IPO investors after Waaree Energies and Deepak Builders and Engineers received an overwhelming response for their public offerings. The IPO of Waaree Energies was subscribed 79.5 times on the final day of bidding, while the public offer of Deepak Builders was booked around 41.5 times on the Day 3. The solar panel manufacturer Waaree Energies received 97.34 lakh applications from investors, which is the highest-ever in the history of IPOs. With this, the solar company has broken the record of 89.07 lakh applications received by Bajaj Housing Finance for its ₹6,560 crore IPO last month.
This comes days after Hyundai Motor India, the country's second-largest car manufacturer after Maruti Suzuki, received tepid response for the highly-anticipated IPO of the year. Despite a lot of buzz, the ₹27,856-crore IPO of Hyundai Motor India, which was entirely an offer for sale (OFS) of 14.22 crore shares by South Korean parent, was subscribed 2.37 times due to muted response from retail and non-institutional investors (NII) amid valuation concerns. The IPO, which opened between October 15-17, received 0.50 times bids in the retail category and 0.60 times in the NII segment. The quota reserved for qualified institutions buyers (QIB) was booked 6.97 times, while the employee portion garnered 1.74 times subscription.
In sharp contrast, both the IPOs of Waaree Energies and Deepak Builders garnered strong response from retail as well as non-institutional investors. The ₹4,321 crore issue of Waaree Energies was subscribed 11.26 times in the retail category and 65.25 times in the NII space. The QIB portion was booked 215.03 times.
In a similar trend, the ₹260 crore IPO of Deepak Builders and Engineers was booked 39.74 times in the retail category, 82.46 times in the NII segment, and 13.91 times in QIB space.
What changed after Hyundai Motor IPO?
The answer is nothing as market dynamic remains the same but one can say investors appear to have made the smartest move by avoiding the hype surrounding India's largest public offering. They preferred to invest in companies that are raising capital to support growth and expansion. In the case of Hyundai, the issue was completely an OFS by the promoter, which means all IPO proceeds will go to the selling shareholders, not the company.
It is notable that Waaree Energies is raising ₹3,600 crore out of ₹4,321 crore by issuing fresh equities, and the offer for sale part is ₹721.44 crore, around 17% of the total issue size. In the case of Deepak Builders, the issue is a combination of fresh issue of shares worth ₹217.21 crore and offer for sale of shares worth ₹42.83 crore.
As per the DRHP filed with SEBI, Waaree Energies intends to use capital raised from fresh equities to finance the cost of establishing the 6GW of Ingot Wafer, Solar Cell and Solar PV Module manufacturing facility in Odisha. A part of the fund will be used for general corporate purposes. Incorporated in December 1990, Waaree Energies is a manufacturer of solar PV modules with an aggregate installed capacity of 12 GW.
Meanwhile, Deepak Builders proposes to utilise the net proceeds from the fresh issue for repayment of certain borrowings availed by the company; and funding its working capital requirements. It will also use a part of the fund to meet general corporate purposes. Formed in September 2017, Deepak Builders is a construction company specialising in administrative, institutional, and industrial buildings, hospitals, stadiums, residential complexes, and other construction activities.
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