Advanced Enzyme IPO closes, subscribed 115.89 times

Mumbai: Advanced Enzyme Technologies Ltd received an overwhelming response to its Rs.412 crore initial public offering (IPO), which closed on Friday after receiving demand for 115.89 times the shares on offer.

As of 6.45pm on Friday, the three-day IPO received applications for 374.80 million shares, compared with the issue size—excluding the anchor book—of 3.23 million shares.

At the lower end of the Rs.880-896 price band for the issue, the enzyme manufacturing, research and development firm drew bids worth roughly Rs.32,983.03 crore.

The institutional investor category received bids for 86.40 million shares, with nearly 41% of the bids coming from foreign portfolio investors. The qualified institutional buyers book was subscribed 94.03 times, stock exchange data showed.

The non-institutional category of shares set apart for high net-worth individuals was subscribed 393.10 times, data showed.

Demand from retail individual investors, whose investments cannot exceed Rs.2 lakh in an IPO, stood at 11.41 times the 1.6 million shares on offer.

Shares reserved for employees were subscribed 1.68 times.

In Mumbai’s grey market, Advanced Enzyme’s shares were quoting at a premium of Rs.350-355, two dealers familiar with the matter said, on condition of anonymity.

Axis Capital Ltd and ICICI Securities Ltd are managing the sale.

On Tuesday, the company allotted shares worth Rs.122.85 crore as part of its anchor book allotment ahead of the IPO.

Shares were allotted to the anchor investors at the upper end of the price band of Rs.896 per share.

The anchor book is that portion of the IPO which bankers can sell to institutional investors on a discretionary basis. Anchor book subscription opens a day before the IPO and acts as an indicator of institutional investor interest.

The public offering of Advanced Enzyme is a mix of primary fund-raising and a secondary share sale by existing investors. The company is looking at raising Rs.50 crore in primary capital through the IPO, which will be used for investment in its US subsidiary for repayment of certain loans.

In 2015-16, the company reported revenue of Rs.294.6 crore, up from Rs.224.2 crore the previous year, while profit rose to Rs.78.4 crore from a year ago.

Domestic brokerage firms have recommended the issue to clients.

According to Religare Securities Ltd, Advanced Enzyme’s revenue and profitability track record has been impressive for the last five fiscal years, starting 2012. “The company is available at a discount to Novozymes and the Indian pharma sector. With experience of more than two decades, specialized business model with high entry barrier, leadership in the Indian enzymes market and strong overseas presence, Advanced Enzyme is placed in a comfortable position to exploit the available opportunities,” said Mehernosh Panthaki, analyst, Religare Securities.

The Advanced Enzyme share sale was the 15th IPO so far this calendar year. It was launched at a time when primary market activity is seeing significant momentum.

On 1 July, the IPO of integrated business services provider Quess Corp. Ltd received subscriptions that were 144.31 times the issue size of Rs.400 crore, registering the fifth highest overall subscription (in percentage terms) for any IPO since 2000.

Last week, L&T Infotech Ltd’s Rs.1,243 crore IPO was subscribed more than 11 times.

So far this year, 14 companies have raised around Rs.10,000 crore through IPOs, while last year, 21 firms raised Rs.13,614 crore from their initial share sales, according to data from Prime Database, a primary market tracker.