Juniper Hotels IPO Subscribed 2.08 times

The stock of Juniper Hotels IPO has a face value of ₹10 per share and the price band for the book building IPO has been set in the range of ₹342 to ₹360 per share. The IPO of Juniper Hotels Ltd will entirely a fresh issue of shares with no offer for sale (OFS) component. The fresh issue tends to bring in fresh funds into the company, but is also EPS and equity dilutive. On the other hand, OFS is just a transfer of ownership, and hence the OFS is neither equity dilutive nor is it EPS dilutive. The fresh issue portion of the IPO of Juniper Hotels Ltd comprises the issue of 5,00,00,000 shares (500 lakh shares), which at the upper price band of ₹360 per share will translate into a fresh issue size of ₹1,800 crore.

Since there is no offer for sale (OFS) component, the fresh issue size will also double as the overall size of the IPO. Therefore, the total Juniper Hotels IPO will comprise of a fresh issue of 5,00,00,000 shares (500 lakh shares) which at the upper end of the price band of ₹360 per share aggregates to total issue size of ₹1,800 crore. The IPO of Juniper Hotels Ltd will be listed on the NSE and the BSE on the IPO mainboard. The fresh funds will be used to repay / prepay some of the high-cost borrowings of the business availed for the recent acquisitions of CHPL and CHHPL. Promoters currently hold 100% in the company, which will get diluted post the IPO to 77.53%. The IPO will be lead managed by JM Financial, CLSA India and ICICI Securities, while KFIN Technologies Ltd will be the registrar to the IPO.

How subscriptions evolved in the IPO period

While the QIB portion and the Retail portion picked up some very marginal traction on the last day, the overall journey was quite disappointing for the HNI / NII investors. In fact, the QIB portion and the Retail portion got just about marginally oversubscribed, while the HNI / NII portion actually fell short of the basic subscription number. The overall IPO also saw the subscription book filling up only on the last and final day of the IPO. The IPO was kept open for a total period of 3 consecutive trading days. All the 3 segments viz, the retail portion, the QIB portion and the HNI / NII portion saw very tepid response, with the HNI / NII portion actually getting undersubscribed. Here is the day-wise progress in IPO subscription of the total available quota. The available QIB quota in the table below represents the oversubscription; is net of the anchor allocation of shares, done one working day prior to the opening of the IPO.

As can be seen from the above table, the overall IPO got just about 2.08 times subscribed at the close of the third and final day of the IPO on 23rd February 2024. Here is a quick look at how the various categories saw traction on the last day of the IPO.

• The QIB portion got 0.00 times subscribed at the end of the first day of the IPO. However, on the last day of the IPO, the subscription moved from 0.06X to 2.96X.
   
• The HNI / NII portion got 0.07 times subscribed at the end of the first day of the IPO. However, on the last day of the IPO, the subscription moved from 0.15X to 0.85X.
   
• Retail portion got 0.57 times subscribed at the end of the first day of the IPO. However, on the third and final day of the IPO, the subscription moved from 0.93X to 1.28X.
   
• The overall IPO got 0.12 times subscribed at the end of the first day of the IPO. However, on third and final day of the IPO, overall subscription moved from 0.24X to 2.08X.

Rapid update on the overall IPO response

The IPO saw fairly tepid response on the Day-1 and Day-2, with most of the action visible only on Day-3 of the IPO, as is normally the case. However, the IPO did close with relatively tepid subscription numbers at the close of Day-3. In fact, the IPO of Juniper Hotels Ltd got fully subscribed only on the last and final day of the IPO itself. As per the combined bid details put out by the BSE at the close of Day-3, Juniper Hotels Ltd IPO was subscribed just about 2.08X overall, with best demand coming from the QIB segment, followed by the Retail  segment and the HNI / NII segment in that order. The HNI / NII segment actually fell short even of the basic one-time subscription.

Overall, the subscription remained tepid across the various categories of investors with the HNI / NII portion actually falling short of minimum one-time subscription this time around. Firstly, let us look at the details of overall allocation of shares to various categories of investors. It may be noted that in the final allocation of shares, minor variations are normal as part of intra-segment adjustments. These, however, do not impact the total number of shares materially.

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 23rd February 2024, out of the 289.47 lakh shares on offer in the IPO, Juniper Hotels Ltd saw bids for 601.14 lakh shares. This implies an overall subscription of 2.08X at a macro level. The granular break-up of subscriptions was in favour of the QIB investors followed by the Retail investors and the HNI / NII investors in that order. QIB bids and NII bids typically gather most of the momentum on the last day, but that was not the case in this issue also in the case of QIB bids. Both the QIB and the NII bids did not display any sort of momentum on the last day nor did it manage to add to the heft of the previous days. Here are the details of the category-wise subscription.

Data Source: BSE

Subscription status of QIB Portion

On 20th February 2024, Juniper Hotels 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 2,25,00,000 shares were allotted to the anchor investors. The allocation was done at the upper IPO price band of ₹360 per share (including premium of ₹350 per share) which resulted in an overall allocation of ₹810 crore. The anchors absorbed 43.73% of the total issue size of ₹1,852.11 crore.  It may be noted that half the anchor portion is locked for 1 month from the date of allotment i.e. up to March 27th, 2024. The other 50% is locked for 3 months from the date of allotment i.e., up to May 26th 2024.

The QIB portion (net of anchor allocation as explained above) had a quota of 157.89 lakh shares of which it has got bids for 467.11 lakh shares at the close of Day-3, implying a subscription ratio of 2.96X 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 Juniper Hotels Ltd IPO subscription overall, the actual demand did turn to be quite tepid for the IPO.

Subscription status of HNI / NII Portion

The HNI portion got subscribed 0.85X (getting applications for 66.80 lakh shares against the quota of 78.95 lakh shares). That is a relatively disappointing 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 just not visible as the overall HNI / NII portion did not even manage to get fully subscribed by the close of the last day of the IPO. While the QIB portion still sailed through, the HNI / NII portion faltered after it fell short of full subscription.

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 1.03X while the below ₹10 lakh bid category (S-HNIs) got subscribed 0.48X. This is just in the form of additional 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 1.28X at the close of Day-3, showing relatively tepid appetite. It must be noted that retail allocation is 10% in this IPO. For retail investors; out of the 52.63 lakh shares on offer, valid bids were received for 67.23 lakh shares, which included bids for 58.72 lakh shares at the cut-off price. The IPO is priced in the band of (₹342 to ₹360 per share) and has closed for subscription as of the close of Friday, 23rd February 2024.