E-commerce services firm MSTC Ltd has extended its initial public offering and cut its price band after failing to get enough bids from institutional buyers, a person familiar with the matter told VCCircle.
MSTC becomes the second state-run company whose IPO couldn’t sail through during the stipulated three-day period after Garden Reach Shipbuilders & Engineers Ltd in September.
MSTC’s public issue of 17.67 million shares received bids for 19.86 million shares towards the end of the third and final day on Friday, stock-exchange data showed. The book was subscribed nearly 1.13 times.
The portion set aside for retail investors, whose bid value cannot exceed Rs 2 lakh per application, was subscribed 2.8 times while the quota for non-institutional investors was covered 1.7 times.
However, the quota of shares for institutional buyers was covered only about 80%. About 75% of the total issue is reserved for institutional buyers, and a full subscription is essential for an issue to go through. There was not a single bid from institutional investors in the first two days of IPO.
A majority of the institutional bids on Friday came from insurance companies. It was not immediately clear if state-run Life Insurance Corporation (LIC) of India bid for any shares. It has helped rescue several state-owned companies’ IPOs in the past, such as those of General Insurance Corp of India and New India Assurance.
The person cited above said on the condition of anonymity that the IPO has been extended by two to three days and that a formal announcement will be made soon. He also said that MSTC has cut the lower end of its price band to Rs 120 from Rs 121 earlier. The upper end remains at Rs 128.
The IPO was subscribed 4.5% at the end of day one on Wednesday. It made little progress on day two, with the book subscribed 11.91%.
The IPO is a share sale by the central government. The company is targeting a valuation of as much as Rs 896 crore ($128.73 million) at the upper end of the price band.
Kolkata-headquartered MSTC had filed its IPO proposal on 1 February. It received regulatory approval on 28 February.
MSTC joins a growing list of state-run companies looking to go public. Other government-owned companies preparing for maiden share sales include Rail Vikas Nigam Ltd and Mazagon Dock Shipbuilders Ltd.
MSTC provides e-commerce-related services across industry segments. It offers e-auction and e-procurement services and develops customised software. It is also a major player in the trading of bulk raw material.
Equirus Capital Pvt. Ltd is the sole merchant banker managing the share sale.
MSTC, incorporated in 1964, originally began operations as a trading company to regulate the export of metal scrap. Since then, the company has grown to become a diversified, multi-product services and trading company.