<article>Investors bid for about 10% of the shares offered by dairy firm <a style="color: #000080;" href="http://www.dealstreetasia.com/?s=parag">Parag Milk Foods Ltd</a> on Wednesday, the first of a three-day initial public offering (IPO) intended to raise Rs.750 crore.</article>

Investors bid for about 10% of the shares offered by dairy firm <a style="color: #000080;" href="http://www.dealstreetasia.com/?s=parag">Parag Milk Foods Ltd</a> on Wednesday, the first of a three-day initial public offering (IPO) intended to raise Rs.750 crore.
As of 5.30pm, Parag Milk received bids for 1.97 million shares against the total issue size of 19.18 million, stock exchange data showed.
The qualified institutional buyers (QIB) category, excluding the anchor allotment, witnessed 13% subscription.
Non-institutional investors, or high net-worth individuals, ordered 3% of the shares set apart for them; retail investors, whose share application in public issues cannot exceed Rs.2 lakh, bought 15% of the stock earmarked for them, data showed.
The company is offering a discount of Rs.12 per equity share to all retail investors and eligible employees.
On Tuesday, Pune-based Parag Milk raised nearly Rs.343 crore from anchor investors ahead of its IPO. The company allotted 15.1 million shares to 17 anchor investors at Rs.227 apiece, the upper end of the Rs.220-227 price band fixed for the IPO.
Brokerages were divided on their views for the IPO, with some recommending investors to avoid the issue, while some asking them to subscribe.
<a style="color: #000080;" href="http://www.dealstreetasia.com/?s=iifl">IIFL Holdings Ltd</a>, which has an ‘avoid’ rating on the issue, said that at the upper IPO price band, the company is richly priced related to the growth prospects and also the emerging competition, and even after a Rs.12 discount to retail investors, the issue is still expensive, compared to its peers.
<a style="color: #000080;" href="http://www.dealstreetasia.com/?s=prabhudas">Brokerage Prabhudas Lilladher Pvt. Ltd</a>, recommended a ‘subscribe’ rating for the IPO and highlighted that while the firm has good long-term prospects with scope of decent returns over the next 2-3 years, it would offer limited gains at listing.
Parag Milk will allot at least 75% of the shares on a proportionate basis to qualified institutional buyers, 15% to non-institutional investors, comprising high net-worth individuals, and 10% to retail investors.
Based on the price band set by the firm, the total issue size will range between Rs.752.6 crore and Rs.767.6 crore, of which the firm’s promoters and private equity (PE) investors will collectively garner upward of Rs.450 crore by selling 20.57 million shares.
<a style="color: #000080;" href="http://www.dealstreetasia.com/?s=IDFC">IDFC </a>Private Equity, a wholly owned subsidiary of IDFC Ltd, has offered to sell about 58.4% of its holding. The Mumbai-based entity, which holds about a 20.1% stake, will sell about 8.26 million shares, according to the share sale documents.
Other PE investors in the company—India Excellence Business Fund (IBEF) and IBEF-1 sponsored by<a style="color: #000080;" href="http://www.dealstreetasia.com/?s=motilal"> Motilal Oswal Financial Services Ltd</a>—will sell 6.02 million shares.
The company intends to raise Rs.300 crore in fresh capital.
Shares of Parag Milk were quoting at a premium of Rs.5-15 per share in the grey market on Wednesday, after rising to Rs.35-40 apiece last week, two dealers said, requesting anonymity, adding that investor interest was subdued due to expensive valuations.
“The issue is expensive, and interest in grey market is not much, as people are not expecting to gain big on listing,” said one of the dealers cited above.
The grey market is an over-the-counter market where IPO shares are bought and sold before a company officially lists on the stock exchange.
Also read:
<a style="color: #ff0000;" href="http://www.dealstreetasia.com/stories/parag-milk-to-launch-ipo-on-4-may-to-raise-rs300-crore-38856/">India: PE-backed Parag Milk to hit market with $45m IPO</a>
<a style="color: #ff0000;" href="http://www.dealstreetasia.com/stories/milk-mantra-in-talks-with-samara-capital-to-raise-rs200-crore-35617/">Indian dairy firm Milk Mantra in talks with Samara Capital to raise $30m</a>
<h4 style="text-align: justify;">This article was first published on <a style="color: #000080;" href="http://www.livemint.com">Livemint.com</a></h4>

Investors bid for about 10% of the shares offered by dairy firm Parag Milk Foods Ltd on Wednesday, the first of a three-day IPO intended to raise Rs.750 crore.

India: IDFC PE-backed Parag Milk IPO subscribed 10% on first day

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