Updater Services IPO Subscribe at 2.90 times

Updater Services IPO has a face value of ₹10 per share while the price band for the book building IPO has been set in the band of ₹280 to ₹300 per share. It is a fresh issue plus an OFS. The fresh issue portion comprises the issue of 1,33,33,333 shares (1.33 crore shares approximately), which at the upper price band of ₹300 per share will translate into fresh issue size of ₹400 crore. The offer for sale (OFS) portion comprises the issue of 80,00,000 shares (80 lakh shares), which at the upper price band of ₹300 per share will translate into an offer for sale (OFS) size of ₹240 crore. Therefore, the overall IPO portion will comprise of the issue of 2,13,33,333 shares (2.13 crore shares approximately), which at the upper price band of ₹300 per share will translate into a total IPO issue size of ₹640 crore.

While the QIB portion picked up traction on the last day, the overall journey was quite slow. In fact, the QIB and retail portion got fully subscribed only on the last and final day of the IPO as did the overall IPO. The HNI / NII portion could only muster 85% subscription at the close of subscription on the third day of the IPO. The table below captures the day-wise progress in IPO subscription.

As can be seen from the above table, the overall IPO got 2.90 times subscribed at the close of the third and final day of the IPO on 27th September 2023.

Rapid update on the overall IPO response

The IPO saw tepid on Day-1 and Day-2 of the IPO and closed with relatively modest subscription numbers at the close of Day-3. In fact, the company got fully subscribed only on the third and final day of the IPO, with the retail portion and the QIB portion getting fully subscribed only on the last day of the IPO. The HNI / NII portion remained undersubscribed, getting investor interest only to the tune of 85% of the allocation size. As per the combined bid details put out by the BSE at the close of Day-3, Updater Services Ltd IPO was subscribed 2.90X overall, with best demand coming from the QIB segment, followed by the retail segment and the HNI / NII segment falling short with just …% subscription at close. In fact, the institutional segment saw some reasonable traction on the last day. The HNI portion did not do well and a lot of the funding applications and corporate applications that were expected to come in on the last day of the IPO did not materialize. Retail portion was relatively timid and got fully subscribed only on the last day of the IPO. Firstly, let us look at the details of overall allocation.

As of close of 27th September 2023, out of the 120 lakh shares on offer in the IPO, Updater Services Ltd saw bids for 347.45 lakh shares. This implies an overall subscription of 2.90X overall. The granular break-up of subscriptions was in favour of the QIB investors followed by the retail portion with the HNI / NII portion actually getting subscriptions only to the tune of 85% of the allocated quota. 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 HNI / NII portion did not gather traction as it fell short with just 85% subscription on the final day. Here are the details of the category-wise subscription.

Subscription status of QIB Portion

Updater Services IPO completed the bidding for its anchor allocation, a day ahead of its IPO opening. There was a strong and robust response as the anchor investors participated through the process of book building. A total of 96,00,000 shares were allotted to anchor investors. The allocation was done at the upper IPO price band of ₹300 per share (including premium of ₹290 per share) which resulted in an overall allocation of ₹288 crore. The anchors absorbed 45% of the total issue size of ₹640 crore.

The QIB portion (net of anchor allocation as explained above) had a quota of 64.29 lakh shares of which it has got bids for 288.14 lakh shares at the close of Day-3, implying a subscription ratio of 4.48X 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 Updater Services Ltd IPO subscription overall, the actual demand did turn to be relatively robust for the IPO.

Subscription status of HNI / NII Portion

The HNI portion got subscribed just 0.85X or 85% of the allocation (getting applications for just 28.41 lakh shares against the quota of 33.43 lakh shares). That is a relatively weak and 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, which normally come in on the last day of the IPO, did not really materialize resulting in the tepid response to the HNI / NII portion of the IPO.

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 1.02X while the below ₹10 lakh bid category (S-HNIs) got subscribed 0.51X. 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 1.39X 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 22.29 lakh shares on offer, valid bids were received for 30.90 lakh shares, which included bids for 26.02 lakh shares at the cut-off price. The IPO is priced in the band of (₹280 to ₹300) and has closed for subscription as of the close of Wednesday, 27th September 2023.