Zaggle Prepaid Ocean Services IPO subscribed 12.57 times at close

The ₹563.38 crore IPO of Zaggle Prepaid Ocean Services Ltd, consisted of a combination of fresh issue and offer for sale. The fresh issue was to the tune of ₹392 crore while the offer for sale (OFS) was worth ₹171.38 crore. The IPO pricing was done in the band of ₹156 to ₹164 per share with the final price to be discovered through the process of book building. While the QIB portion picked up traction on the last day, the overall journey was quite slow. In fact, the QIB and HNI / NII portion got full subscribed only on the last day of the IPO; as did the overall IPO of Zaggle Prepaid Ocean Services Ltd. The retail portion, on the other hand, got fully subscribed on the second 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 12.57 times subscribed at the close of the third and final day of the IPO on 18th September 2023.

Rapid update on the overall IPO response

The IPO saw fairly tepid on Day-1 and Day-2 of the IPO and closed with relatively healthy subscription numbers at the close of Day-3. In fact, the company got fully subscribed only on the last day of the IPO, with only the retail portion getting fully subscribed on the second day of the IPO. As per the combined bid details put out by the BSE at the close of Day-3, Zaggle Prepaid Ocean Services Ltd IPO was subscribed 12.57X overall, with best demand coming from the QIB segment, followed by the HNI / NII segment and the retail segment in that order. In fact, the institutional segment saw some very good traction on the last day. The HNI portion did do well and a lot of the surge of funding applications and corporate applications did come in on the last day of the IPO. Retail portion was relatively timid and got fully subscribed on the second day of the IPO, while the QIB and HNI / NII portion got fully subscribed only on the last day, as was the overall IPO. Firstly, let us look at the details of overall allocation.

As of close of 18th September 2023, out of the 193.27 lakh shares on offer in the IPO, Zaggle Prepaid Ocean Services Ltd saw bids for 2,428.83 lakh shares. This implies an overall subscription of 12.57X overall. The granular break-up of subscriptions was in favour of the QIB investors followed by the HNI / NII investors while the retail portion got the lowest subscription among the various categories. 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. Both the QIB and the NII bids picked momentum on the last day and added to its heft of the previous days. Here are the details of the category-wise subscription.

Subscription status of QIB Portion

On 13th September 2023, Zaggle Prepaid Ocean Services Ltd completed the bidding for its anchor allocation. There was a strong and robust response as the anchor investors participated through the process of book building. A total of 1,54,58,515 shares were allotted to a total of 23 anchor investors. The allocation was done at the upper IPO price band of ₹164 (including premium of ₹163 per share) which resulted in an overall allocation of ₹253.52 crore. The anchors absorbed 45% of the total issue size of ₹563.38 crore. Listed below are the 10 anchor investors who got allotted more than 4% each of the anchor shares in the IPO of Zaggle Prepaid Ocean Services Ltd. These 10 anchor investors listed below accounted for 63.32% of the total anchor allocation of Zaggle Prepaid Ocean Services Ltd; setting  the tone for retail participation in the IPO.

Data Source: BSE Filings

The QIB portion (net of anchor allocation as explained above) had a quota of 104.32 lakh shares of which it has got bids for 1,745.46 lakh shares at the close of Day-3, implying a subscription ratio of 16.73X 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 Zaggle Prepaid Ocean Services Ltd IPO subscription overall, the actual demand did turn to be quite robust for the IPO.

Subscription status of HNI / NII Portion

The HNI portion got subscribed 8.85X (getting applications for 472.10 lakh shares against the quota of 53.37 lakh shares). That is a relatively strong 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 visible as the overall HNI / NII portion added to its heft on the last day of the IPO. Apart from the QIB portion, even HNIs saw good traction on the last day.

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 10.00X while the below ₹10 lakh bid category (S-HNIs) got subscribed 6.53X. 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 5.94X at the close of Day-3, showing relatively moderate appetite. It must be noted that retail allocation is just 10% in this IPO. For retail investors; out of the 35.58 lakh shares on offer, valid bids were received for 211.17 lakh shares, which included bids for 179.72 lakh shares at the cut-off price. The IPO is priced in the band of (₹156 to ₹164) and has closed for subscription as of the close of Monday, 18th September 2023.

Brief on the business model of Zaggle Prepaid Ocean Services Ltd

Zaggle Prepaid Ocean Services Ltd, was incorporated in 2011 to provide fintech products and services to manage corporate business expenses. These were being managed through automated and innovative workflows designed for such specific needs. Zaggle Prepaid Ocean Services Ltd offers fintech and SAAS (software as a service) products to corporates in the field of banking, fintech, healthcare, FMCG, automobiles, infrastructure, industrial manufacturing etc. the SAAS platform of Zaggle Prepaid Ocean Services Ltd is designed with 3 broad purposes in mind. It helps in business spend management; and this includes managing of expenses and of vendors. Secondly, the platform also manages a very efficient and effective rewards and incentives program meant for employees and channel partners based on performance. Lastly, the SAAS platform also handles gift card management for merchants, which broadly falls under customer engagement management. The company has an impressive roster of clients which, inter alia, includes Tata Steel, Persistent Systems, Inox, Pitney Bowes, Wockhardt, Mazda, Philips Carbon Black (PCBL), Hiranandani Group, Greenply Industries and Cotiviti.

The product portfolio of Zaggle Prepaid Ocean Services Ltd comprises of various focused solutions for corporates. The Propel Platform is a SAAS platform for channel rewards and incentives management as well as for employee recognition. The SAVE SAAS based platform also offers a mobile application for digitized expense management, digitized authentication, and employee reimbursements. The Customer Engagement Management Services (CEMS) system enables merchants to manage their entire gamut of customer experience under a single umbrella platform. Zaggle Prepaid Ocean Services Ltd also offers the Zaggle payroll card which is a pre-paid card that allows customers to pay contractors, temporary employees, and contract workers as an alternative to cash or bank payments. Lastly, the Zoyer is an integrated data driven SAAS platform that offers spend management with automated finance capabilities.

The fresh funds will be used for customer acquisition, customer retention, building the technology stack, expanding into new markets and also for repayment of certain high cost loans. The IPO will be lead managed by ICICI Securities, Equirus Capital, IIFL Securities and JM Financial. KFIN Technologies will be the registrar to the IPO.