IndiGo IPO subscribed more than six times as investors seek to tap world’s fastest growing aviation market.

Typically, the demand from retail and high networth individuals for an IPO picks up on the last day. Photo: Mint

The three-day initial public offering (IPO) of InterGlobe Aviation Ltd, owner of India’s largest and most profitable airline, IndiGo, closed on Thursday after receiving demand for 6.14 times the shares it offered investors, as financial institutions and rich individuals sought to tap the world’s fastest growing aviation market.

Interest from retail investors picked up towards the end of the last day of the Rs.3,130 crore IPO, and 90% of the shares set apart for them were bought.

The portion of shares set aside for qualified institutional buyers (QIBs) was subscribed 17.79 times, according to stock exchange data. The shares set aside for high net-worth individuals were subscribed 3.57 times; employees bought 12% of the shares they were offered.

Most of the bids in the IPO, which values IndiGo at $4 billion, came in at the upper end of the Rs.700-765 price band, according to stock exchange data.

“We are overwhelmed with the response. Many of these investors are the very best of the best. We take a lot of pride in the fact that we have put the Indian airline industry back on the global map,” said Aditya Ghosh, president and whole-time director at IndiGo.

“But you know, that’s in the past now. Our track record has brought them to us. But now it’s up to me and my team to deliver on their trust and thank them for their faith with our future performance,” said Ghosh.

The IPO by IndiGo, the only domestic airline to be consistently profitable since 2009, is the largest initial share sale in India since 2012.

On Monday, InterGlobe Aviation finalized the allocation of 10.87 million equity shares at Rs.765 apiece, the upper end of the price band, aggregating to Rs.832.03 crore, to anchor investors.

These anchor investors included Fidelity Investments, GIC Pte Ltd, Acacia Partners LP, HDFC Trustee Co. Ltd, DB International (Asia) Ltd, DSP BlackRock India Tiger Fund, Kuwait Investment Authority Fund, Merrill Lynch Capital Markets Espana SA SV, Credit Suisse Singapore Ltd, Harvard Management Co. Inc., Sundaram Mutual Fund and Goldman Sachs India Fund.

The anchor book is that portion of the IPO that bankers can allot to institutional investors on a discretionary basis. Anchor book subscription opens a day before the launch of an IPO and is a barometer of institutional investor interest.

“The institutional demand was driven mostly by the anchor investors of the issue, which is a set of very high quality investors who understand the low-cost carrier model. Overall, around 70-75% institutional demand is from long-only investors, with remaining coming from hedge funds,” said an investment banker involved in the share sale, who requested anonymity as he is not authorized to speak to the media.

Demand from the big-name institutional investors also drew high net-worth individuals and retail investors to the share sale, he said.

There is a lot of liquidity in the market across all three categories of investors, for quality deals, and that is evident from the fact that two large issues—by InterGlobe and earlier in the month by Coffee Day Enterprises Ltd (CDEL)—have received strong demand, he added.

CDEL, the firm which runs the popular Café Coffee Day chain, raised Rs.1,150 crore through its IPO, which closed on 16 October. CDEL’s IPO was subscribed 1.8 times.

“Most of the investors who did not buy into IndiGo’s anchor book, have participated in the main book seeing the quality of the book. Domestic institutions such as mutual funds also participated strongly in the IPO,” said another investment banker involved in the IPO, who also requested anonymity.

Among the high net-worth individuals who subscribed to IndiGo shares was investor Rakesh Jhunjhunwala, he added.

India has the fastest growing domestic aviation market in the world, ahead of China and the US. The number of air passengers increased 20.2% in the eight months ended 31 August, compared with the same period a year ago, owing to more flights, fare cuts and faster economic growth, according to the International Air Travel Association.

Also Read: Air carrier IndiGo’s $482m initial public offering subscribed fully on Day 2

IndiGo parent InterGlobe Aviation’s IPO subscribed 87% on day 1

Café Coffee Day parent IPO fully subscribed on closure

This article was first published on Livemint.com

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.