Gaja Capital-backed CL Educate Ltd, which runs test-preparation brand Career Launcher, saw its initial public offering (IPO) sail through on the final day on Wednesday driven by institutional and retail investors.
While institutional investors led subscription activity on the first two days, retail individuals lapped up the stock on the final day of the IPO.
The public offering of nearly 3.33 million shares—excluding anchor investors’ portion—received bids for 6.22 million shares by the end of the final day. The IPO was subscribed 1.86 times, stock-exchange data showed.
Institutional buyers’ quota was subscribed nearly four times the shares reserved for them, while the retail investors’ portion was covered 1.56 times.
The quota of shares set aside for non-institutional investors, such as corporate houses and wealthy individuals, was covered just 21%.
New Delhi-based CL Educate is the first education services company from India to float an IPO in five years, after MT Educare Ltd in March 2012. The IPO was covered 36% on the first day.
On Friday, CL Educate had raised Rs 71.68 crore ($10.95 million) by selling shares to anchor investors. The education services company allotted nearly 1.43 million shares to nine institutional investors at the upper end of the Rs 500-502 price band.
CL Educate was seeking a valuation of Rs 708.84 crore ($107.11 million) through the IPO, which will see Gaja Capital, the company’s promoter, promoter group individuals and institutional shareholders dilute their stakes.
The Rs 238.95-crore IPO comprised a fresh issue of 2.18 million shares and an offer for sale of nearly 2.58 million shares. It will see a dilution of 33.61% stake on a post-offer basis.
Use of proceeds
The company plans to use a tad more than Rs 50 crore to meet working capital requirements for itself as well as its subsidiaries GK Publications Pvt. Ltd and Kestone Integrated Marketing Services Pvt. Ltd.
It will use about Rs 20 crore for advance debt repayment at its subsidiary Career Launcher Infrastructure Pvt. Ltd.
Besides, it will earmark about Rs 25 crore for acquisitions, strategic initiatives and general corporate purposes.
CL Educate had, in September 2014, sought a valuation of $130-140 million in a proposed IPO, according to VCCircle estimates at the time. But it shelved its IPO plans in April 2015.
The company filed its draft red herring prospectus again with capital markets regulator Securities and Exchange Board of India in March 2016. It received regulatory clearance in June last year.
CL Educate was the fourth IPO in calendar year 2017, after BSE Ltd, D-Mart hypermarket chain operator Avenue Supermarts Ltd, and Jagran Prakashan Ltd’s radio unit Music Broadcast Ltd.
So far, 2017 seems to be an extension of the good run following a blockbuster 2016, when fundraising by companies via initial share sales jumped to a six-year high of Rs 26,500 crore.
The IPO market in India picked up pace after four years of slow activity in mid-2014 when the BJP-led government took over. In 2015, 21 companies had raised about Rs 14,000 crore, as per stock-exchange data.
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