Mumbai: The Rs1,039 crore IPO of Warburg Pincus-backed Lemon Tree Hotels Ltd witnessed an overall subscription of 119%, or 1.19 times, on Wednesday, the last day of the share sale.

While the portion of shares reserved for institutional investors in the Lemon Tree IPO received a firm response, those reserved for other categories of investors saw very weak subscriptions.

As of 7pm Wednesday, on the institutional front, the IPO saw a subscription of 3.89 times, while portions reserved for retail investors and high net-worth individuals (HNIs) were subscribed 12% each.

The hotel chain operator had set a price band of Rs54-56 per share for the IPO.

At the upper end of the price band, the share sale values Lemon Tree at Rs4,403 crore.

The Lemon Tree IPO is a pure secondary offering, where the private equity firm Warburg Pincus and other existing shareholders are selling a total of 185.48 million shares. Warburg Pincus, which invested approximately Rs300 crore in 2006 for a 24% stake in the company, is selling a 12% stake.

At the upper end of the price band, Warburg will garner Rs529 crore (approximately $81.2 million) from the share sale.

Other investors selling shares include Delhi-based billionaire Ravi Jaipuria and his firm RJ Corp., who are selling shares worth Rs220 crore.

Founded by Patanjali Govind Keswani in 2002, Lemon Tree operates under three brands that cater to the needs of different hotel segments: Lemon Tree Premier is targeted primarily at the upper-mid-scale hotel segment; Lemon Tree Hotels is targeted at the mid-scale segment; and Red Fox by Lemon Tree Hotels is targeted at the economy segment.

The share sale comes at a time when the IPO market is facing a tough time. Volatile secondary markets have played spoilsport for some IPOs that were launched in March.

On Monday, ICICI Securities Ltd, the brokerage and investment banking arm of ICICI Bank Ltd, cut the size of its initial share sale to around Rs3,520 crore after witnessing low subscription, especially in the portion of shares reserved for HNIs.

ICICI Securities had initially planned to sell shares worth Rs4,017 crore through its IPO and had set a price band of Rs519-520 per share.

Last week, the Rs4,229 crore IPO of state-owned Hindustan Aeronautics Ltd (HAL) witnessed a subscription of 99% on the last day of the offering.

Other state-owned firms that launched their IPOs in March also witnessed low subscriptions. The IPOs of state-owned Mishra Dhatu Nigam Ltd (Midhani) and Bharat Dynamics were subscribed 1.21 times and 1.3 times, respectively.

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