Mumbai: Avenue Supermarts, which runs the D-Mart chain of food and grocery supermarkets, on Tuesday said that it has raised Rs561 crore by selling shares to investors as part of the so-called anchor book allocation, a day ahead of its initial public offering (IPO).
The anchor book is that portion of an IPO that bankers can allot to institutional investors on a discretionary basis. Anchor book subscription opens a day before the launch of an IPO and acts as an indicator of institutional investor interest.
Shares were allotted to anchor investors at Rs299 apiece, the upper end of the IPO price band of Rs295-299 per share.
D-Mart IPO: Value does not come cheap
The issue, worth Rs1,870 crore, will open on 8 March and close on 10 March. The company is divesting 10% of its total equity shares.
Investors who participated in the anchor book allocation include Smallcap World Fund, New World Fund, Fidelity, Govt of Singapore, JP Morgan, T Rowe Price, HDFC Mutual Fund, ICICI Prudential Mutual Fund and SBI Mutual Fund. A total of 35 investors participated in the anchor book allocation.
Avenue plans to use Rs1,080 crore to repay debt and Rs300.6 crore to purchase and build new stores.
The company is one of the most profitable retailers in the country, and posted a Rs300.92 crore profit after tax on revenues of Rs8,800.03 crore in fiscal 2017, until December 2016.
Why is the market waiting for the D-Mart IPO?
D-Mart operates 118 stores, with 3.59 million sq. ft of store space, across 45 cities. The company gets 59% of its sales from Maharashtra and Daman, and 18% from Gujarat, despite being present in eight states.
D-Mart’s is the third IPO this calendar year, following initial share sales of stock exchange BSE Ltd and Radio City FM operator Music Broadcast Ltd.
In 2016, 26 firms raised Rs26,493 crore through IPOs, data from primary market tracker Prime Database shows.