Sai Silks (Kalamandir) Ltd has received bids worth Rs 83.06 crore for its initial public offering against its plan to raise Rs 89 crore. As against an offer of 1.27 crore shares, bids were received only for 1.10 crore shares, translating to just 87 per cent.

“However, the issue will sail through as it received a response of 93.32 per cent (in terms of value) against the minimum requirement of 90 per cent mandated by SEBI,” said an expert in IPO issues.

The portion meant for retail investors was subscribed 1.31 times. The demand from retail investors were at 91.45 lakh shares as against 69.92 lakh shares on offer by the company.

In contrast, for 44.49 lakh shares offered to the non-institutional investors, bids came in only for 19.30 lakh shares, while the qualified institutional bidders’ portion (12.71 lakh shares) remained unsubscribed.

Safety net helps

Retail investors, who have burnt their fingers in recent IPOs, have reposed faith in this issue, largely due to the safety net provided by promoters. Under the safety net scheme, promoters have offered to buyback the shares from the primary market investor at the issue price, if the market value of the stock falls below the issue price.

Bhavya Gandhi, Senior Research Analyst, Phillip Capital, said the buyback offer valid for six months, has reduced or almost mitigated the retail investor risk involved in primary markets.

Besides, he said, the issue has been priced competitively, considering the big appetite for branded saris in the Indian markets.

(This article was published on February 13, 2013)
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