The Hindu : Maruti IPO opens with a bang

Online edition of India's National Newspaper
Friday, Jun 13, 2003

Business

Business

Maruti IPO opens with a bang

By Our Special Correspondent

NEW DELHI JUNE 12. The auto leader Maruti Udyog's public issue was today given a warm response by the market, getting oversubscribed by nearly 10 per cent on the first day. The company's initial public offer (IPO), aimed at reducing Government equity by 25 per cent, is boosting hopes that subsequent IPOs by public sector enterprises could be given an equally enthusiastic response.

The floor price of the shares with a face value of Rs. 5 has been fixed at Rs. 115, but over 85 per cent bids were at Rs. 120 per share or higher, according to data available from the stock exchanges.

The Disinvestment Minister, Arun Shourie's expectations yesterday that it would set the tone for forthcoming IPOs by Bharat Petroleum Corporation Limited (BPCL) and National Aluminium Corporation (Nalco) have been proved correct and the Government is now looking forward to the issue being oversubscribed by eight or nine times.

Despite the good response on the first day with the issue being oversubscribed within three hours of the launch, the sources assured that the issue which is being conducted through the book-building route would remain open till the scheduled date of June 19.

The IPO made an offer of 7.2 crore shares but bids for Rs. 7.89 crores had been received on the first day. This is the eighth largest public issue in the country and represents a major achievement for the public sector disinvestment process that appeared to have slowed down in recent months. It is now expected that the public issues of BPCL and Nalco will be proceeded with more quickly in order to take advantage of the positive tenor of the market.

Under the existing provisions, up to 60 per cent would be offered to qualified institutional buyers. In addition, at least 15 per cent of the offer would be given to wholesale bidders and 25 per cent to retail bidders. Allocation for retail investors, however, may be raised in view of the aim to make the company more broad based.

The Japanese partner, the Suzuki Motor Corporation (SMC), which has had a fruitful tie up with the Indian Government to make MUL the market leader in this country, had agreed to underwrite the IPO at Rs. 2,300 per share of face value of Rs. 100. Instead, the company opted to split each share into 20 of Rs. 5 each, bringing the floor price to Rs. 115 per share.

Our Mumbai Special Correspondent writes:

On the National Stock Exchange and the Bombay Stock Exchange together the total number of bids received is at 10.56 crores. The BSE received a total number of 7.90 crore bids and the NSE 2.66 crore bids. On the BSE, the number of bids received for Rs. 115 is 4.44 lakhs, for Rs. 116 (17.26 lakhs) for Rs. 118 (75.20 lakhs), for Rs. 120 (5.83 crores ), for Rs. 122 (1.05 crores), and for Rs. 125 (4.01 lakhs).

In the run up to the high profile IPO, MUL held a series of well publicised roadshows in Mumbai, Delhi, London, New York, Boston, Los Angeles and San Francisco.

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