The initial public offering of staffing company TeamLease Services Ltd was oversubscribed 65 times as institutional investors, high net-worth individuals (HNIs) and corporate investors joined the party on the final day of the issue.
This is the second-best showing for an IPO in eight years. Last year, VRL Logistics' IPO was oversubscribed 73 times.
The record for the most oversubscription is held by Future Capital Ltd. The firm saw its IPO getting oversubscribed 132 times in January 2008, at the peak of the bull run. Future Group later sold its holding in the company to Warburg Pincus and the firm is now run as Capital First.
TeamLease also beat Reliance Power Ltd's issue in February 2008. The Reliance Power issue, which saw bids worth Rs 7.5 lakh crore against the issue size of Rs 11,560 crore, was fully covered within a minute of opening. This was despite the market heading for a fall with the first shock to the bull run just weeks ahead of the Reliance Power IPO. The company's share price has never managed to reach the issue price.
The TeamLease IPO saw the institutional portion getting oversubscribed 26 times while the portion reserved for HNIs and corporate investors was oversubscribed a whopping 184 times. Retail investors’ portion was covered 10 times.
The IPO subscription, which made a slow start on day one, was led by retail investors on the first two days. The portion reserved for retail investors was subscribed more than four times on day two itself.
The company has priced its shares in a band of Rs 785-850. The issue is expected to fetch as much as Rs 423 crore at the upper end of the band. This includes up to Rs 150 crore (around $22.6 million) through a fresh issue of shares.
It is the second IPO this year, after that of auto-parts maker Precision Camshafts Ltd.
The TeamLease IPO also includes an offer for sale of around 1.5 million shares each by entities related to Gaja Capital and ICICI Venture and of 153,321 shares by the promoters. The selling shareholders will pocket as much as Rs 274 crore from the issue.
From the proceeds of the fresh issue, the company plans to use around Rs 80 crore for existing and incremental working capital requirements, Rs 25 crore for acquisitions and other strategic initiatives, and Rs 15 crore for upgrade of IT infrastructure.
TeamLease mainly offers temping services where it provides temporary workforce to its clients in bulk on a contract. This allows clients to hire without adding to their direct employee base. This employment and business model is closely associated with sectors like manufacturing, banking, BPO and retail, among others. However, temping also encompasses senior-level short-term flexi managers. TeamLease also offers permanent staffing services.
IDFC Securities Ltd, Credit Suisse Securities (India) Pvt Ltd and ICICI Securities Ltd are the Book Running Lead Managers to the offer.
Click here for more on the company and the IPO and here for valuations.