Home >Market >Stock-market-news >RBL Bank IPO closes, subscribed 69.57 times

Mumbai: Private sector lender RBL Bank Ltd (formerly Ratnakar Bank) received a stellar response to its  1,211 crore initial public offering (IPO) that closed on Tuesday.

The three-day issue drew subscriptions that were 69.57 times the issue size—excluding the anchor allotment—registering the highest overall subscription among IPOs of private sector banks.

DCB Bank Ltd’s IPO in October 2006 was subscribed 35 times, while Yes Bank Ltd’s IPO in June 2005 was subscribed 29.13 times, according to data by Capitaline, a corporate data provider.

As of 6.30pm on Tuesday, RBL Bank received applications for roughly 2.64 billion shares compared with an issue size of 37.9 million shares, excluding the anchor allotment, stock exchange data showed.

At the lower end of the  224-225 price band for the issue, the IPO drew bids worth roughly  59,006.52 crore. The institutional investor category received bids for 924.36 million shares and the book was subscribed 85.08 times, data showed.

The non-institutional category comprising high networth individuals was subscribed 198.05 times, data showed.

Demand from retail individual investors, whose investments cannot exceed  2 lakh in an IPO, stood at 5.60 times the 18.92 million shares on offer, exchange data showed.

Merchant bankers were enthused by the response to the IPO despite weakness and volatility in secondary markets. That aside, hefty grey market premium—hinting sharp listing gains—also drew investors in large numbers.

Subhrajit Roy, executive director and head, ECM origination, Kotak Mahindra Capital Co. Ltd, said primary markets have performed well, despite the weakness in secondary markets.

“Deals which have been priced well have received strong participation despite the market conditions," Roy said. “Specifically, with respect to RBL Bank, there was excitement among investors given the fact that it was the first private sector bank IPO in a decade. The bank, led by a new management team, has been growing at a healthy pace without deteriorating its asset quality and the fundamentals have helped garner a strong response."

In Mumbai’s grey market, RBL Bank’s shares were being quoted at a premium of  70-75 per share on Tuesday, two dealers said on conditions of anonymity.

The Mumbai-headquartered private sector lender on last Thursday raised  363.88 crore by selling shares to anchor investors.

Anchor investors included Merrill Lynch Capital Markets Singapore Pte Ltd, FIL Mauritius Investments Ltd, Government Pension Fund Global (Norway), Goldman Sachs India Fund Ltd, GMO Emerging Domestic Opportunities Fund and Auburn Ltd (the public market investment arm of home-grown private equity fund ChrysCapital Investment Advisors India Pvt. Ltd).

The anchor book is that portion of the 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.

Kotak Mahindra Capital Co. Ltd, Citigroup Global Markets India Pvt. Ltd, Axis Capital Ltd, Morgan Stanley India, HDFC Bank Ltd, ICICI Securities Ltd, IIFL Holdings Ltd, IDFC Securities Ltd and SBI Capital Markets Ltd are managing the share sale.

RBL Bank will become the country’s first private sector bank to go public in more than a decade. The last private sector bank to launch an IPO in India was Yes Bank Ltd, which raised  315 crore in July 2005.

In 2010, state-owned Punjab and Sind Bank Ltd managed to raise  480 crore through its IPO.

RBL Bank’s issue, including the anchor allotment, comprises a fresh issue of shares worth  832.5 crore and sale of shares worth  378.5 crore by existing shareholders.

The bank aims to raise its capital base for growth and comply with incremental capital needs under the Basel-III norms as well as the Reserve Bank of India’s norms.

In 2015-16, RBL Bank reported a revenue of  3,234.85 crore, up from  2,356.49 crore a year ago, and a profit of  296.8 crore, up from  208.45 crore a year ago.

The bank’s income grew at an annual rate of 50% compounded over the last five years. Its return on equity has also doubled in the past five years, according to data made available in the issue documents.

RBL Bank has 197 branches and 362 ATMs across 16 states. Its shares are valued at 2.2 times price-to-book (P/B) on historical value.

Subscribe to Mint Newsletters
* Enter a valid email
* Thank you for subscribing to our newsletter.

Never miss a story! Stay connected and informed with Mint. Download our App Now!!

Edit Profile
My ReadsRedeem a Gift CardLogout