India Shelter Finance Corporation IPO Final Subscription at 36.71 times

The IPO of India Shelter Finance Corporation Ltd opens on 13th December 2023 and closes for subscription on 15th December 2023. The stock of India Shelter Finance Corporation Ltd has a face value of ₹5 per share and the price band for the book building IPO has been set in the band of ₹469 to ₹493 per share, with the final price to be discovered in this price band. The IPO of India Shelter Finance Corporation Ltd will be a combination of a fresh issue and an offer for sale (OFS). Here are the details of the fresh issue component of the IPO. The fresh issue portion of India Shelter Finance Corporation Ltd IPO entails the issue of 1,62,27,181 shares (162.27 lakh shares approximately), which at the upper price band of ₹493 per share translates into fresh issue size of ₹800 crore. The offer for sale (OFS) portion comprises the sale of 81,13,890 shares (81.14 lakh shares approximately), which at the upper price band of ₹493 per share translates into an offer for sale (OFS) size of ₹400 crore.

The OFS shares will be offered by the investor shareholders (non-promoter shareholders) of India Shelter Finance Corporation Ltd. Among the major investors shareholders offering their shares in the OFS are Madison India Opportunities Fund via Catalyst Trusteeship (₹171.29 crore); Nexus Ventures III Ltd (₹142.50 crore); Madison India Opportunities IV (₹54.43 crore); and MIO Star Rock (₹31.76 crore). Effectively, the India Shelter Finance Corporation IPO will comprise of the issue and sale of 2,43,40,771 shares (243.41 crore shares approximately), which at the upper price band of ₹493 per share will translate into overall IPO size of ₹1,200 crore. The stock will be listed on the NSE and the BSE on the IPO mainboard. The net proceeds from the fresh issue portion will be used to augment the capital base (a basic necessity for financial institutions to expand their loan books). The IPO will be lead managed by ICICI Securities, Citigroup Global Markets, Kotak Mahindra Capital, and Ambit Private Ltd. KFIN Technologies Ltd will be the registrar to the issue.

How subscriptions evolved in the IPO period

While the QIB portion and the HNI / NII portion picked up traction on the last day, the overall journey was quite slow for the retail investors. In fact, the QIB portion got fully subscribed only on the last and final day of the IPO while the HNI / NII portion and the retail portion got fully subscribed on the first day of the IPO itself. Even the overall IPO saw subscription book filling up 2.34 times, at the close of the first day of the IPO. The IPO was kept open for a total period of 3 days. The table below captures the day-wise progress in IPO subscription.

As can be seen from the above table, the overall IPO got 36.71 times subscribed at the close of the third and final day of the IPO on 15th December 2023. Here is a quick look at how the various categories saw traction on the last day of the IPO.
    • The QIB portion got just 0.38 times subscribed at the end of the first day of the IPO. However, on the last day of the IPO, the subscription moved from 0.88X to 89.70X.

    • The HNI / NII portion got 4.42 times subscribed at the end of the first day of the IPO. However, on the last day of the IPO, the subscription moved from 7.76X to 28.51X.

    • Retail portion got just 2.53 times subscribed at the end of the first day of the IPO. However, on the last day of the IPO, the subscription moved from 5.41X to 9.95X.

    • The overall IPO got 2.34 times subscribed at the end of the first day of the IPO. However, on last day of the IPO, overall subscription moved from 4.62X to 36.71X.

Rapid update on the overall IPO response

The IPO saw fairly tepid to regular flows on Day-1 and Day-2, with most of the action visible only on Day-3 of the IPO. However, the IPO did close with relatively healthy subscription numbers at the close of Day-3. In fact, the IPO of India Shelter Finance Corporation Ltd got fully subscribed on the first day of the IPO itself. As per the combined bid details put out by the BSE at the close of Day-3, India Shelter Finance Corporation Ltd IPO was subscribed 36.71X overall, with best demand coming from the QIB segment, followed by the HNI / NII segment and the retail segment in that order. In fact, the institutional segment and the HNI / NII segments saw some very good traction on the last day. The HNI portion did do well and a lot of the surge of funding applications and corporate applications did come in on the last day of the IPO. Retail portion was relatively strong, although it was fully subscribed on Day-1 of the IPO itself, but subsequent traction was limited. Firstly, let us look at the details of overall allocation.

Having understood the allocation of shares across various categories, Let us look at how the subscription data played out for the IPO at an overall level and at a more granular level.

As of close of 15th December 2023, out of the 179.10 lakh shares on offer in the IPO, India Shelter Finance Corporation Ltd saw bids for 6,575.23 lakh shares. This implies an overall subscription of 36.71X overall. The granular break-up of subscriptions was in favour of the QIB investors followed by the HNI / NII investors and the retail investors in that order. QIB bids and NII bids typically gather most of the momentum on the last day, and that was the case in this issue also in the case of QIB bids. Both the QIB and the NII bids picked momentum on the last day and added to its heft of the previous days. Here are the details of the category-wise subscription.

Data Source: BSE

Subscription status of QIB Portion

On 12th November 2023, India Shelter Finance Corporation Ltd completed the bidding for its anchor allocation. There was a robust response as the anchor investors participated through the process of book building. A total of 73,02,229 shares were allotted to the anchor investors. The allocation was done at the upper IPO price band of ₹493 per share (including premium of ₹488 per share) which resulted in an overall allocation of ₹360 crore. The anchors absorbed 30% of the total issue size of ₹1,200 crore. 
The QIB portion (net of anchor allocation as explained above) had a quota of 51.17 lakh shares of which it has got bids for 4,590.13 lakh shares at the close of Day-3, implying a subscription ratio of 89.70X for QIBs at the close of Day-3. QIB bids typically get bunched on the last day and while the heavy demand for the anchor placement had given an indication of the institutional appetite for the India Shelter Finance Corporation Ltd IPO subscription overall, the actual demand did turn to be quite robust for the IPO.

Subscription status of HNI / NII Portion

The HNI portion got subscribed 28.51X (getting applications for 1,094.13 lakh shares against the quota of 38.38 lakh shares). That is a relatively strong response at the close of Day-3 largely because this segment normally sees the maximum response bunched on the last day. Bulk of the funded applications and corporate applications, come in on the last day of the IPO, and that was visible as the overall HNI / NII portion added to its heft on the last day of the IPO. Apart from the QIB portion, even HNIs saw good traction on the last day.
Now the NII/HNI portion is reported in two parts viz. bids below ₹10 lakhs (S-HNI) and bids above ₹10 lakhs (B-HNI). The bids above the ₹10 lakh category (B-HNIs) typically represents most of the major funding customers. If you break up the HNI portion, the above ₹10 lakh bid category got subscribed 28.32X while the below ₹10 lakh bid category (S-HNIs) got subscribed 28.89X. This is just for information and is already part of the overall HNI bids explained in the previous para.

Subscription status of Retail Individuals

The retail portion was subscribed just 9.95X at the close of Day-3, showing relatively strong appetite. It must be noted that retail allocation is 35% in this IPO. For retail investors; out of the 89.55 lakh shares on offer, valid bids were received for 890.97 lakh shares, which included bids for 778.56 lakh shares at the cut-off price. The IPO is priced in the band of (₹469 to ₹493 per share) and has closed for subscription as of the close of Friday, 15th December 2023.