New Delhi (NewsRise):
The owner of India’s largest coffee chain received bids for 1.2 times the shares it offered in the nation’s biggest initial public offering in three years, indicating that investors remain bullish on Prime Minister Narendra Modi’s efforts to revive economic growth.
Coffee Day Enterprises, which runs the Cafe Coffee Day outlets, received 31.3 million bids for the 25.8 million shares it offered, according to provisional data on the National Stock Exchange. The company aims to raise as much $176 million via the IPO.
A slew of companies, including India’s largest discount airline, have filed for IPOs this year, betting that Modi’s reforms and easing interest rates will revive growth in Asia’s third-largest economy. As many as 16 companies filed their draft prospectus with markets regulator the Securities and Exchange Board of India between July and September, the highest quarterly filing in four years, Business Standard newspaper reported.
“Improvement in the economic situation means that the appetite will pick up,” said Deven Choksey, managing director at K.R. Choksey Shares and Securities. “If quality papers come at a reasonable price, investors will be more than happy to purchase.”
Until Thursday, Coffee Day Enterprises had received bids for 75% of its shares on offer. Demand picked up after a lukewarm response on Wednesday, the opening day for subscription, led by bids from the so-called Qualified Institutional Buyers that included local banks and insurance companies.
Discount carrier IndiGo’s parent InterGlobe Aviation is likely to open the 25 billion rupee ($385 million) initial public offer on Oct. 26, Economic Times reported. Mumbai-based L&T plans to sell 17.5 million shares, or nearly 11% of outstanding stock of unit Larsen & Toubro Infotech. L&T, which currently holds 161.25 million shares in the unit, plans to raise around 15 billion rupees via the share sale.
Coffee Day Enterprises has been expanding outlets in recent years, betting that rising disposable incomes and increasing coffee consumption in the world’s second-most populous nation will boost revenues.
Analysts had largely advised investors to be cautious about the company’s financials and its complex structure, which includes a range of businesses from real estate to software services. Coffee Day’s other businesses have a history of weak returns on capital, they said.
From January to September this year, 15 companies had raised $992 million through IPOs in India, compared with $197 million last year and $235 million in 2013. The market is still a fraction of what it was in 2010, when 64 firms raised $8.34 billion, according to Prime Database.
source: http://www.asia.nikkei.com / Nikkei Asia Review / Home> Markets> Equities / October 16th, 2015
