Speciality chemicals maker Galaxy Surfactants Ltd saw sustained demand for its shares on the second day of its initial public offering (IPO) on Tuesday as bids continued to pour in from institutional and retail investors.
The public issue of 4.43 million shares, excluding the anchor investors’ portion, received bids for 18.31 million shares, stock exchange data showed. Galaxy’s book was subscribed 4.13 times at the end of day two.
Institutional buyers bid for 10.9 times their quota of 1.26 million shares. The retail portion, in which bids cannot exceed Rs 2 lakh, was covered roughly twice the 2.21 million shares on offer.
The portion for non-institutional investors, comprising corporate bodies and high net-worth individuals (HNIs), was subscribed 19%.
HNIs typically bid on the final day of a public offering, which in this case is Wednesday, to keep their financing costs low. They borrow short-term capital from various avenues, barring banks, to fund their IPO applications. HNIs deploy a small fraction of their own capital — margin money — upfront. Additional capital raised through short-tenure loans helps them place large bids.
Galaxy Surfactants' IPO was almost fully subscribed (99.5% subscribed) on the first day on Monday.
Ahead of the offering, the Navi Mumbai-headquartered company sold about 1.9 million shares to anchor investors at the upper end of the Rs 1,470-1,480 price band. The IPO size is Rs 937 crore ($147 million) at the upper end of the band.
Sovereign wealth funds Abu Dhabi Investment Authority and Kuwait Investment Authority bought 1,00,000 shares each. Other anchor investors mostly included domestic and foreign mutual funds and insurance companies.
Last November, Galaxy had refiled its draft red herring prospectus (DRHP) for an IPO. It received the Securities and Exchange Board of India’s approval for the IPO on January 12.
Galaxy was the second company to receive regulatory clearance for an IPO in 2018 after restaurant chain Barbeque Nation. As many as 46 firms had received clearances for IPOs in 2017, according to the market regulator's website.
Galaxy's previous attempt to go public in May 2011 had failed. At the time, Galaxy had aimed to raise up to Rs 201 crore. However, it withdrew the IPO a day before closing as the issue was subscribed just 30%.
Now, Galaxy’s renewed public offering comprises entirely a sale of 6.33 million shares by promoters and individuals. In all, 307 individuals will sell shares through the IPO. The company will not receive any proceeds from the offering.
Galaxy is seeking a valuation of Rs 5,247.30 crore ($823 million) through the IPO. Promoter stake will decline to 70.91% after the IPO from the present 76.98%, VCCircle estimates show.
ICICI Securities, Edelweiss Financial Services and JM Financial Institutional Securities are the merchant bankers managing the IPO.
Peer Fine Organic Industries Pvt. Ltd is also preparing to go public.
Galaxy Surfactants
Galaxy, which was incorporated in May 1986, makes surfactants and other speciality ingredients for personal care and home care industries. Its products are used in consumer-centric personal care and home care products, including, skin care, oral care, hair care, cosmetics, toiletries and detergent products.
The company claims to have significantly expanded and diversified its product profile since its inception three decades ago. It caters to multinational, regional and local players operating in home and personal care industries.
Its product portfolio, divided into performance surfactants and speciality care products, comprises more than 200 product grades marketed to over 1,700 customers across 70 countries.
Galaxy counts Cavinkare, Colgate-Palmolive (India), Dabur India, Henkel, Himalaya, L'Oréal, Procter and Gamble Home Products, RB (formerly Reckitt Benckiser), and Unilever, among its key clients.
Since 2002, the company has received 47 patents, including 10 in the US, and two each from China, European Union, Japan, Russia and India.
The company owns and operates seven manufacturing facilities, of which two are located outside India. It recently set up a pilot plant at Tarapur, Maharashtra, to scale up production.
For additional information on Galaxy’s proposed IPO, click here.