Mahindra Holidays IPO oversubscribed almost 10 times

Mahindra Holidays & Resorts India Ltd's 9.27-million-share initial public offer (IPO), which closed yesterday, has been subscribed 9.74 times the shares on sale. The company, a unit of the diversified Mahindra & Mahindra Ltd best known for its utility vehicles, had set a price range of Rs275-325 a share for the issue.

Mahindra Holidays has received bids for 9,08,33,800 shares as against the issue size of 92,65,275 shares, as bidding was particularly strong on the last day. Qualified institutional buyers were keen on the issue, with their portion being oversubscribed 12.8 times, followed by non-institutional investors with 11 times oversubscription.

The size of the issue stood at Rs301 crore at the upper end of the price band and Rs255 crore at the lower end of the band. Mahindra & Mahindra would raise Rs90.7-123 crore from the sale of 33 lakh shares and it will hold 83 per cent of Mahindra Holidays after the issue.

The proceeds from the issue are expected to be deployed in setting up new projects and for the expansion of some of the existing resorts and hence a wider choice of holiday destinations to members of Mahindra Holidays' schemes. Mahindra Holidays currently runs 27 resorts across India and Thailand.

The IPO will end a 15-month drought in India as firms had desisted from making public offerings in 2008 in the wake of the economic slowdown and a falling market.

The issue, representing about 11 percent of the post-issue paid-up capital, comprises a fresh issue of 5.89 million shares and an offer for sale of 3.36 million shares by Mahindra & Mahindra. The shares are proposed to be listed on the National Stock Exchange and the Bombay Stock Exchange.

Kotak Mahindra Capital, HSBC Securities and Capital Markets and SBI Capital Markets are the book running lead managers to the issue.