Archean Chemical Industries Ltd IPO subscribed 32.23 times at close

Archean Chemical Industries IPO worth Rs.1,462.31 crore, comprises of a fresh issue of Rs805 crore and an offer for sales by the promoters and early shareholders to the tune of Rs657.31 crore. While the fresh issue would be EPS dilutive and equity dilutive, the OFS only resulted in a transfer of ownership with no fresh funds coming into the company. The IPO saw fairly tepid response on Day-1 and Day-2 of the IPO but still managed to close with rather healthy subscription numbers at the close of Day-3. In fact, the company got substantially oversubscribed on the last day of the IPO. As per the combined bid details put out by the BSE at the close of Day-3, Archean Chemical Industries Ltd IPO was subscribed a total of 32.23 times 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 and the HNI segment saw some good traction on the last day. The HNI portion did see a surge in corporate applications and funded applications on the last day.

As of close of 11th November 2022, out of the 199.57 lakh shares on offer in the IPO, Archean Chemical Industries Ltd saw bids for 6,431.71 lakh shares. This implies an overall subscription of 32.23X. 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 NII bids and QIB bids did see a lot of additional traction on the last day of the IPO.

Archean Chemical Industries Ltd IPO Subscription Day-3

QIB Portion

Let us first talk about the pre-IPO anchor placement. On 07th November 2022, Archean Chemical Industries Ltd did an anchor placement of 1,61,67,991 shares at the upper end of the price band of Rs.407 to 42 anchor investors raising Rs.658.03 crore. The list of QIB investors included a number of marquee global names like Goldman Sachs, Ashoka Indian Fund, Norwegian Pension Fund, Theleme India Master Fund, Segantii India Mauritius, Saint Capital, Societe Generale ODI 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 107.06 lakh shares of which it has got bids for 5,235.91 lakh shares at the close of Day-3, implying a subscription ratio of 48.91X 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 Archean Chemical Industries Ltd IPO subscription overall, the actual demand did turn to be quite robust for the IPO.

HNI / NII Portion

The HNI portion got subscribed 14.90X (getting applications for 827.21 lakh shares against the quota of 55.51 lakh shares). That is a rather steady 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 clearly visible as the overall HNI / NII portion added to its heft on the last day. However, the HNI portion did see a very solid subscription at the close of the IPO.

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 16.90X while the below Rs10 lakh bid category (S-HNIs) got subscribed 10.92X. 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 9.96X at the close of Day-3, showing steady retail appetite. It must be noted that retail allocation is just 10% in this IPO. For retail investors; out of the 37.01 lakh shares on offer, valid bids were received for only 368.59 lakh shares, which included bids for 314.73 lakh shares at the cut-off price. The IPO is priced in the band of (Rs.386-Rs.407) and has closed for subscription as of the close of Friday, 11th November 2022.