Net Avenue Technologies IPO: Oversubscribed 511.10 Times

About the Net Avenue Technologies IPO

Net Avenue Technologies IPO opened for subscription on 30th November 2023 and closed for subscription on 04th December 2023. The stock of Net Avenue Technologies Ltd had a face value of ₹1 per share and it is a book building issue with the price band set in the range of ₹16 to ₹18 per share. Being a book built issue, the final price will be discovered in the band after the IPO. The IPO of Net Avenue Technologies Ltd has only a fresh issue component with no book built portion. As part of the fresh portion of the IPO, Net Avenue Technologies Ltd will issue 57,00,000 shares (57 lakh shares), which at the upper IPO band price of ₹18 per share aggregates to a total fund raising of ₹10.26 crore. As there is no offer for sale portion, the size of the fresh issue will be the total size of the IPO too. Hence the total IPO will also comprise of 57 lakh shares, which at the upper price band of ₹18 per share aggregates to ₹10.26 crore.

The minimum lot size for the IPO investment will be 8,000 shares. Thus, retail investors can invest a minimum of ₹144,000 (8,000 x ₹18 per share) in the IPO. That is also the maximum that the retail investors can invest in the IPO. HNI / NII investors can invest a minimum of 2 lots comprising of 16,000 shares and having a minimum lot value of ₹288,000. There is no upper limit on what the QIBs as well as what the HNI / NII investors can apply for. Like any SME IPO, Net Avenue Technologies Ltd also has a market making portion with a market maker inventory allocation of 2,88,000 shares. The market maker, Shreni Shares Private Ltd, they will provide 2-way quotes to ensure liquidity and low basis costs  post listing. The promoter stake in Net Avenue Technologies IPO will get diluted post the IPO from 45.31% to 33.27%. The company will use the proceeds of the fresh issue to enhance market awareness, new customer acquisition, and funding working capital needs. Shreni Shares Ltd are the lead manager to the issue, and Bigshare Services Private Ltd are the registrars.

Final subscription status of Net Avenue Technologies IPO

Here is the subscription status of the Net Avenue Technologies IPO as at close on 04th December 2023.

As can be seen from the above table, the overall IPO of Net Avenue Technologies IPO got subscribed an impressive 511.10 times. The Retail portion led the stakes with 721.68 times subscription, followed by the HNI / NII portion at 616.24 times subscription. Even the QIB portion got subscribed an impressive 61.99 times overall. 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 categories of 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, the QIB and the HNI / NII segments. A total of 2,88,000 shares were allocated as market maker portion to Shreni Shares 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.

The anchor allotment is normally done a day ahead of the IPO opening. In the case of Net Avenue Technologies Ltd, the anchor allocation of 16.16 lakh shares comprising 28.37% of the total IPO size was done a day ahead of the IPO opening on November 29th, 2023. The entire allocation was done at the upper end of the price band of ₹18 per share (which comprises of the face value of ₹1 per share and a premium of ₹17 per share). The entire anchor allocation was spread across just 2 anchor investors with Chanakya Opportunities Fund I  getting 60.40% of the shares and Chhattisgarh Investments getting the balance 39.60% of the anchor shares. The market making portion of 5.06% is independent of the anchor allocation. The anchor portion is carved out of the QIB portion and so the QIB quota available to the public has been reduced by the anchor size. That adjustment has been reflected in the revised allocation in the table above.

How subscription built up for the Net Avenue Technologies IPO

The oversubscription of the IPO was dominated by the retail investors followed closely by the HNI / NII investors and then the QIB category in that order. The table below captures the day-wise progression of the subscription status of Net Avenue Technologies Ltd. The IPO was kept open for 3 working days.

Here are the key takeaways from the subscription numbers on a day-wise basis for Net Avenue Technologies Ltd.

• The Retail portion got the best subscription in the Net Avenue Technologies Ltd IPO at 721.68 times and it got 23.37 times subscribed on the first day of the IPO itself.
   
• The HNI / NII portion was behind the Retail portion in terms of subscription at 616.24 terms overall and it got 10.74 times subscribed at the end of the first day.
   
• While the retail and HNI / NII portion getting fully subscribed on the first day of the IPO itself, it was only the QIB portion with lagged with just about 0.00 times subscription on the first day while the overall IPO also got fully subscribed at 14.00 times at the close of the first day of the IPO itself.
   
• The QIB, retail and HNI / NII portion saw the best traction on the last day of the IPO. The Retail portion saw the total subscription ratio moving from 89.412X to 721.68X on the last day of the IPO. Even the HNI / NII portion saw the total subscription ratio move from 46.17X to 616.24X on the last day of the IPO.
   
• Just as the retail portion and the HNI portion saw the best incremental traction on the last day of the IPO, even the QIB portion saw the last day subscription jump from 0.41X to 61.99X. Similarly, even the overall IPO saw smart traction on the last day with the subscription ratio for the overall IPO moving from 54.76 to 511.10X on the last day.

With the IPO closed for subscription at the end of December 04th, 2023, 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 07th December 2023 while the refunds would be initiated on 08th December 2023. The shares of Net Avenue Technologies Ltd (ISIN - INE518X01015) would be credited to the demat accounts of eligible shareholders by the close of 11th December 2023 while the stock of Net Avenue Technologies Ltd is expected to be listed on 12th December 2023. The listing will happen on the NSE SME segment for small companies, which is distinct from the regular mainboard IPO space.