Bharati IPO receives good response

Mumbai: Indias first fully book-built Rs 833-crore Bharti Tele-Ventures initial public offering (IPO) has received an encouraging response from institutional and high net-worth investors. The IPO has been oversubscribed by over 2.5 times.

The issue was opened on 28 January 2002 for a total of 18.5-crore equity shares, representing 10 per cent of the post-issue capital of the company. But the subscriptions were for around 47.7 crore in shares, indicating a 2.5 times oversubscription. The issue was closed on 2 February 2002.

The demand was built at higher than the floor price of Rs 45 per share, largely between Rs 46 to Rs 48 per share. But the company, in the interest of all investors, has decided to fix the issue price at Rs 45 per share in consultation with the book running lead manager, JM Morgan Stanley and DSP Merrill Lynch. On completion of the allotment procedure by the weekend, the Bharti shares are to be listed on 11 February on Indias leading bourses.

Analysts however say that retail investors, hit severely over the past few years due to investment activities in both primary and secondary markets, seem to have preferred to adopt a wait-and-watch attitude for the much-hyped IPO. Even mutual fund investors are said to have adopted the same approach. Both these segments of investors, the analysts said, will wait till the Bharti shares are listed on the bourses, whereafter the price may come lower than the offer price.

The Bharti-Tele statement said while the total demand received under the book has been Rs 2,137.5 crore, the amount retained by the company at the issue price of Rs 45 per share is Rs 833.5 crore. After the final allocation of shares, the foreign ownership of the company has gone up to 46.7 per cent, leaving a clear gap of 2.3 per cent for the secondary market trading.

Says Bharti Tele-Ventures chairman and group managing director Sunil Mittal: "The excellent response is a reflection of investors confidence in Bharti and the huge potential of the Indian telecom market. We are pleased to have received an excellent response in a challenging market environment. The overwhelming response from foreign investors reinforces their confidence in Bharti and India as an attractive investment destination."

A majority of applicants were only from the first two segments 60 per cent (financial institutions and qualified institutional buyers) and 15 per cent (high net-worth individuals and corporates). It was the third 25 per cent segment reserved for retail investors that seemed to be awaiting the expected response on the last day of the issue.