The initial public offering of Ahmedabad-based non-banking financial company MAS Financial Services Ltd continued to see strong demand on the second day of the issue on Monday led by institutional and retail investors.
The offering of 7.12 million shares—excluding the anchor allotment—received bids for 34.29 million shares, or 4.8 times the issue size, stock-exchange data showed.
The institutional investors’ portion of 1.98 million shares received 5.79 times bids. Retail investors bid for 6.28 times the 3.47 million shares on offer.
The quota of shares reserved for non-institutional investors, comprising corporate bodies and wealthy individuals, was subscribed 48%.
High net-worth individuals (HNIs) typically bid on the final day of a public offering to minimise their IPO financing costs. In IPO financing, HNIs borrow short-term capital from various avenues, barring banks, to fund their IPO applications and deploy only a small fraction of their own capital—called margin money—upfront.
The IPO was fully subscribed on its opening day.
Last week, the company raised Rs 135.91 crore ($20.9 million) from anchor investors ahead of the IPO. MAS—which counts Sarva Capital as its private equity backer along with German and Dutch development finance institutions DEG and FMO—allotted 2.96 million shares at the upper end of Rs 456-459 price band.
The company, 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 size is Rs 460.04 crore ($70 million). This comprises an issue of fresh shares worth Rs 233 crore and a sale of shares by existing investors worth Rs 227.04 crore.
MAS had filed its draft red herring prospectus with the Securities and Exchange Board of India on 27 March. It received the market regulator’s nod on 26 May.
VCCircle was the first to report in September 2016 that MAS was finalising plans to float an IPO.
The company will look to deploy the capital raised over this financial year and the next. The IPO will also help it augment its capital base to meet the capital adequacy norms.
The company 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 in Gujarat, Rajasthan and Maharashtra. It also has presence in Tamil Nadu, Madhya Pradesh, Karnataka and New Delhi, primarily to tap into the commercial vehicle market.
MAS Financial will join housing finance company PNB Housing Finance Ltd, small finance banks Ujjivan Financial Services Ltd and Equitas Holding Ltd, insurance firm ICICI Prudential Life, and RBL Bank Ltd that successfully floated IPOs in the past year. Other financial services companies that have gone public include SBI Life Insurance, state-owned housing and urban infrastructure finance company Hudco Ltd, AU Financiers (India) Ltd.
Motilal Oswal Investment Advisors Pvt Ltd is the sole merchant banker managing MAS Financial’s IPO.