Deccan Aviation IPO over-subscribed

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Our fundamentals helped, says airline chief


Our Bureau

Takes wing
Market crashed 826 points on day of opening
IPO had to attract investors in burnt-out mark

Mumbai, May 26

Deccan Aviation Ltd's IPO stood 1.23 times over-subscribed by 7 p.m. on Friday with another half-an-hour left for final figures, an official at Enam Financial Consultants, one of the lead managers to the issue, said.

The fully book-built issue, originally priced at Rs 150-175 a share, had its floor price revised to Rs 146 and closure extended by three days after last week's market crash diluted its prospects.

When contacted, Mr G.R. Gopinath, Managing Director of the airline, said: "It was as if a tsunami had hit the issue. We asked our people to work hard and leave the rest to God. Our fundamentals helped."

The issue had opened a full week into a nervous Sensex, jittery from the 176.97-point correction that followed the recent election results and the 462-point metals-driven slide of May 15.

On May 18 - the day Deccan Aviation's IPO opened - the market crashed 826 points due to confusion on capital gains tax and selling by foreign funds.

The next day, the Sensex swung intra-day over 800 points, even greeting the week thereafter with an intra-day plunge of 1111.7 points.

The low-cost carrier's IPO had only 2-3 turbulence-free days to attract investors, that too in a burnt-out market.

News reports had said that the airline hoped to raise Rs 400-425 crore for debt repayment and infrastructure development from the IPO.

Mr Gopinath said that there was no scope to withdraw and reschedule as the IPO was already set to open when the market crisis began unfolding.

Among major domestic carriers, it is only the second to go public.

Over February 18-24, 2005 under vastly different market conditions, Jet Airways had seen its IPO over-subscribed 10 times on a price band of Rs 950-1,125.

At that time, the BSE Sensex was at roughly half the current level, closing February 18, 2005 at 6,584.32 and ending February 24 at 6,574.21. Jet's IPO had been over-subscribed 4.25 times on the first day itself.

(This article was published in the Business Line print edition dated May 27, 2006)
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