The initial public offering of Ahmedabad-based non-banking financial company MAS Financial Services Ltd was fully subscribed on the first day of its offering on Friday, led by institutional and retail investors.
The public offering of 7.12 million shares, excluding the anchor allotment, received bids for 7.53 million shares, stock exchange data showed. The book was subscribed 1.05 times.
The institutional investors’ category of 1.98 million shares received 1.78 times bids. The quota of shares reserved for non-institutional investors, comprising corporate bodies and wealthy individuals, was subscribed 22.31%.
The retail investors’ category was subscribed 1.01 times the 3.47 million shares on offer.
High-net-worth individuals (HNIs), or wealthy investors, typically bid on the final day of a public offering to keep their IPO financing costs at a bare minimum. HNIs borrow short-term capital from various avenues, barring banks, to fund their IPO applications. They deploy a small fraction of their own capital—which is called margin money—upfront. Additional capital raised through short-tenure loans help wealthy investors place large bids in an IPO.
On Thursday, the company raised Rs 135.91 crore ($20.9 million) from anchor investors, including funds of Nomura, JP Morgan and Wasatch Advisors, ahead of the IPO.
MAS—which counts Sarva Capital as its private equity backer along with German and Dutch development finance institutions (DFIs) DEG and FMO—allotted 2.96 million shares at the upper end of Rs 456-459 price band, the company said in a stock exchange filing.
The company, which was formerly known as M/S Marketing & Allied Services, is seeking a valuation of Rs 2,525.64 ($384 million) through the IPO that will result in roughly 18.5% stake dilution on post-issue basis.
The IPO is worth Rs 460.04 crore ($70 million). The company is issuing fresh shares worth Rs 233 crore besides a secondary market sale of shares worth Rs 227.04 crore by existing investors.
MAS Financial had filed its draft red herring prospectus (DRHP with the Securities and Exchange Board of India (SEBI) on 27 March. It received the market regulator’s nod on 26 May.
VCCircle was the first to report in September 2016 that MAS Financial was finalising plans to take the IPO route, following in the footsteps of several banking, financial services and insurance companies that have either gone public or firmed up IPO plans in the last one year.
The company will look to deploy the capital raised over FY18 and FY19. The IPO will also help it augment its capital base to meet requirements under capital adequacy norms.
Under the Reserve Bank of India's (RBI) capital adequacy regulations, NBFCs must have a capital-to-risk assets ratio (CRAR) of 15%.
It provides corporate loans to NBFC-MFIs and other NBFCs engaged in retail finance, small ticket business loans, small commercial vehicle loans, two wheeler loans and machinery finance. Most of its branches are located in Gujarat, Rajasthan and Maharashtra. It also has presence in Tamil Nadu, Madhya Pradesh, Karnataka and New Delhi, primarily to tap the commercial vehicle market.
MAS Financial will join housing finance company PNB Housing Finance Ltd, small finance bank UjjivanFinancial Services Ltd, insurance firm ICICI Prudential Life and baking firm RBL Bank Ltd that successfully floated IPOs in the past one year.
Motilal Oswal Investment Advisors Pvt Ltd is the sole merchant banker managing MAS Financial’s IPO.
