Kay Cee Energy IPO Subscribed 1,052.45 times

About the Kay Cee Energy & Infra IPO

Kay Cee Energy & Infra IPO opened for subscription on 28th December 2023 and closed for subscription on 02nd January 2024. The company has a face value of ₹10 per share and it is a book building issue with the IPO priced in the band of ₹51 to ₹54 per share. Being a book built issue, the final price will be discovered in the above band. Kay Cee Energy & Infra IPO has only a fresh issue component and no offer for sale (OFS) portion. Obviously, the fresh issue portion is EPS dilutive and equity dilutive. As part of the fresh issue portion of the IPO, Kay Cee Energy & Infra Ltd will issue a total of 29,50,000 shares (29.50 lakh shares), which at the upper band IPO price of ₹54 per share aggregates to a fresh fund raising of ₹15.93 crore.

Since there is no offer for sale (OFS), the fresh issue component will also double up as the overall IPO size. Therefore, the total IPO size will also comprise the issue of 29,50,000 shares (29.50 lakh shares) which at the upper IPO band price of ₹54 per share aggregates to overall IPO size of ₹15.93 crore. Like every SME IPO, this issue also has a market making portion with a market maker inventory allocation of 1,90,000 shares. The market maker (Giriraj Stock Broking Private Ltd) will provide two-way quotes to ensure liquidity and low basis costs post listing.

The promoter holding in the company currently stands at 96.12%. Post the IPO, the promoter equity holding share will get diluted to 70.25%. Kay Cee Energy & Infra Ltd will use the proceeds of the fresh issue for funding its working capital gaps and also for general corporate expenses. GYR Capital Advisors Private Ltd will be the lead manager to the issue, and Bigshare Services Private Ltd will be the registrar to the issue. The market maker for the issue is Giriraj Stock Broking Private Ltd.

Final subscription status of Kay Cee Energy & Infra Ltd

Here is the subscription status of the Kay Cee Energy & Infra Ltd as at close on 02nd January 2024.

As can be seen from the above table, the overall IPO of Kay Cee Energy & Infra Ltd got subscribed an impressive 1,052.45 times. The HNI / NII portion led the stakes with 1,668.97 times subscription, followed by the Retail portion at 1,311.10 times subscription. The QIB portion of the IPO also got a healthy subscription of 127.71 times. That is a very strong and smart response to an SME IPO, especially if you consider the median subscriptions that similar other SME IPOs have got in the past. The subscription has shown strong traction for the IPO across all the three categories of investors; QIB, retail and HNI / NII investors.

Allocation quota for various categories

The issue was open for QIBs, retail investors and the HNI / NII investors. There was a broad quota designed for each of the segments viz. the retail, QIB and the HNI / NII segments. A total of 1,90,000 shares were allocated as market maker portion to Giriraj Stock Broking Private Ltd, which will act as market maker inventory to provide bid-ask liquidity on the counter post listing. Market maker action not only improves liquidity in the counter but also reduces the basis risk. The table below captures the allocation reservation done for each of the categories out of the total number of shares offered in the IPO.

In the above IPO of Kay Cee Energy & Infra Ltd, the anchor allocation of 8,00,000 shares was carved out of the QIB portion, as a result of which the QIB offer to the public reduced from the original 45.97% of the issue size to 18.85% of the issue size. The anchor allocation bidding opened on December 27, 2023 and also closed on the same day. A total of 8,00,000 shares were allocated across 2 anchor investors. The anchor allocation was done at the upper end of the IPO price band of ₹54 per share (which includes face value of ₹10 per share and premium of ₹44 per share). The total anchor allocation value was worth ₹4.32 crore. The anchor allottees included Finavenue Capital Trust – Finavenue Growth Fund (23.25%), and Ativir Alternate Investment Fund (76.75%). These 2 anchor investors accounted for the entire 100% of the anchor allocation. Out of the anchor shares allocated to investors on December 27, 2023, a lock in of 30 days will be applicable for 50% of the shares (up to February 15, 2024) and a lock-in of 90 days will be applicable for the remaining shares (up to May 17, 2024). The allocation of market maker inventory of 6.44% is outside the anchor portion.

How subscription built up for the IPO of Kay Cee Energy & Infra Ltd

The oversubscription of the IPO was dominated by the HNI / NII followed by the Retail category and the QIB category in that order. The table below captures the day-wise progression of the subscription status of Kay Cee Energy & Infra Ltd. The IPO was kept open for 4 working days.

Here are the key takeaways from the subscription numbers on a day-wise basis for Kay Cee Energy & Infra IPO.

• The HNI / NII portion got the best subscription in the Kay Cee Energy & Infra Ltd IPO at 1,668.97 times and it got 53.42 times subscribed on the first day of the IPO itself.
   
• The Retail portion was behind the HNI / NII portion in terms of subscription at 1,311.10 times overall and it got 69.33 times subscribed at the end of the first day.
   
• The QIB portion was third in the pecking order in terms of subscription at 127.71 times overall and it got 5.96 times subscribed at the end of the first day.
   
• While the QIB, retail and HNI / NII portion getting fully subscribed on the first day of the IPO itself, even the overall subscription was filled up on the first day itself. The overall IPO which saw subscription of 1,052.45 times also got fully subscribed at 47.93 times at the close of the first day of the IPO itself.
   
• The retail, and HNI / NII portion saw the best traction on the last day of the IPO. The HNI / NII portion saw the total subscription ratio moving from 460.44X to 1,668.97X on the last day of the IPO. Even the retail portion saw the total subscription ratio move from 622.03X to 1,311.10X on the last day of the IPO.
   
• The last day traction story was true for QIBs and the overall IPO also. The QIB portion saw the total subscription ratio moving from 18.42X to 127.71X on the last day of the IPO. Finally, regarding the overall IPO subscription ratio, it also moved from 416.01X to 1,052.45X on the last day of the IPO.

Overall, the IPO of Kay Cee Energy & Infra Ltd became one of the few SME IPOs in the last one year to have got subscribed more than 1,000 times.

Next steps after the closure of the IPO

With the IPO closed for subscription at the end of January 02nd, 2024, the next piece of action shifts to the finalization of the basis of allotment and later to the listing of the IPO. The basis of allotment will be finalized on 03rd January 2024 and the refunds will be initiated on 04th January 2024. In addition, the demat credits are expected to happen on 04th January 2024 and the stock is scheduled to list on 05th January 2024 on the NSE SME segment. This is the segment, in contrast to the mainboard, where IPOs of small and medium enterprises (SMEs) are incubated. The demat credits to the demat account to the extent of allotment will happen by the close of 04th January 2024 under ISIN Number (INE0RCG01017). The listing will happen on the NSE SME segment for small companies, which is distinct from the regular mainboard IPO space.