KFIN Technologies Ltd IPO subscribed 2.59 times at close

KFIN Technologies IPO worth Rs. 1,500 crore, consisted entirely of an offer for sale for the said amount. There was no fresh issue portion in the IPO, so no fresh funds came in and it was not EPS dilutive. The IPO saw fairly tepid response on Day-1 and Day-2 of the IPO and managed to get fully subscribed by the close of Day-3. In fact, the company got fully subscribed only on the last day of the IPO. As per the combined bid details put out by the BSE at the close of Day-3, KFIN Technologies Ltd IPO was subscribed at 2.59X overall, with robust demand coming from the QIB segment, followed by the retail segment. The HNI / NII segment actually did not even see full subscription of the allocated quota. As a result, only the institutional segment saw some good traction happening on the last day. The HNI portion had seen a tepid response on the first two days of the IPO and even on the last day, there was hardly any improvement in the IPO subscription numbers. The HNI / NII portion got grossly undersubscribed as of the close of the third day of the IPO.

As of close of 21st December 2022, out of the 227.75 lakh shares on offer in the IPO, KFIN Technologies Ltd saw bids for 614.68 lakh shares. This implies an overall subscription of 2.59X. The granular break-up of subscriptions was in favour of the QIB investors followed by the retail investors. However, the NII / HNI portion got undersubscribed in the IPO. 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. However, the NII bids hardly picked up momentum even on the last day and remained an underperformer even on the last day.

KFIN Technologies Ltd IPO Subscription Day-3

QIB Portion

Let us first talk about the pre-IPO anchor placement. On 16th December 2022, KFIN Technologies Ltd did an anchor placement of 1,84,42,623 shares at the upper end of the price band of Rs.366 to a total of 44 anchor investors raising Rs.675 crore in the process. The list of QIB investors included a number of marquee global names like Ashoka India Fund, Goldman Sachs India Equity Portfolio, Sixteenth Street Asian Gems, Carmignac Portfolio, Aberdeen Standard, East Capital, Pari Washington India Fund, Citigroup Global Markets, Morgan Stanley Asia Singapore (ODI), Copthall Mauritius etc; apart from a host of Indian mutual fund and insurance companies.

The QIB portion (net of anchor allocation as explained above) has a quota of 129.68 lakh shares of which it has got bids for 540.47 lakh shares at the close of Day-3, implying a subscription ratio of 4.17X 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 KFIN Technologies Ltd IPO subscription overall, the actual demand did not really turn to be as robust as expected for the IPO.

HNI / NII Portion

The HNI portion got undersubscribed get just 0.23X subscription or just about 23% of the HNI / NII portion getting subscribed. The HNI portion got applications for 15.21 lakh shares against the quota of 64.84 lakh shares, implying subscription ratio of just 23%. That is a rather 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 not exactly visible as the overall HNI / NII portion fell really short of its base target on the last day. As a result, the HNI portion got undersubscribed and will now be reallocated to other segments.

Now the NII/HNI portion is reported in two parts viz. bids below Rs10 lakhs (S-HNI) and bids above Rs10 lakhs (B-HNI). The bids above the Rs10 lakh category (B-HNIs) typically represents most of the major funding customers. If you break up the HNI portion, the above Rs10 lakh bid category got subscribed 0.25X or 25% while the below Rs10 lakh bid category (S-HNIs) got subscribed 0.20X or just 20%. This is just for information and is already part of the overall HNI bids explained in the previous para.

Retail Individuals

The retail portion was subscribed 1.36X at the close of Day-3, showing fairly tepid retail appetite as the retail portion just about scraped through. It must be noted that retail allocation is just 10% in this IPO. For retail investors; out of the 43.23 lakh shares on offer, valid bids were received for only 58.99 lakh shares, which included bids for 51.53 lakh shares at the cut-off price. The IPO is priced in the band of (Rs.347 to Rs.366) and has closed for subscription as of the close of Wednesday, 21st December 2022.