India’s largest initial public offering (IPO) got off to a flying start with Jio Platforms Ltd scoring the highest first-day subscription for any mega share sale, as investors jostled for a pie of the country’s largest telecom company.
Investors bid for as much as 3.16 times of Jio Platforms shares on offer on Wednesday, compared to Hyundai Motors India Ltd‘s 0.42 times and the National Stock Exchange’s (NSE) 0.72 times subscription on the first day of the share sale. While Hyundai Motors and NSE raised ₹27,858 crore and ₹22,562 crore respectively, Jio will raise ₹30,213 crore at the upper end of the price band. The early interest underlines strong interest in the long-awaited IPO, which closes for subscription on 23 October.
The company, which is selling 19.75 crore shares to the public (excluding shares sold to anchor investors) received bids for 62.36 crore shares totalling ₹69,763 crore, BSE data showed, or ₹47,660 crore more than expected. The deal was fully subscribed within 100 minutes, a rare feat for a mega offering in India.
Qualified institutional buyers (QIBs) such as foreign institutions and mutual funds led from the front, bidding for 9.42 times the number of shares reserved for them, and making up 74% of the total demand for shares. Except retail investors who bid for 73% of their quota, all categories were oversubscribed on Day One.
The strong institutional participation came on a weak market day, when the Nifty 50 index fell 0.34%.
“Jio Platforms was already India’s largest IPO in terms of issue size. It has now also received the highest first-day bid value among mega-IPOs. Seeing this in a bearish market is even more surprising,” said Mohit Mehra, head of equity capital markets at Zerodha Corporate Advisors.
“Looking at the record demand across investor categories reflects the bullishness of participants in an otherwise volatile market,” said independent market analyst Ambareesh Baliga.
Jio Platforms made its anchor book allocations public on 19 October. Among the anchor participants, LIC received the highest, or 6.17% stake, of the anchor book. This was followed by New World Fund with 6% of the book, and the Government of Singapore with 4.2%.
Ashish Rathi, chief operating officer and wholetime director at HDFC Securities said, “The strong subscription is also driven by the attractive grey market premium. In many IPOs that did not see full subscription on Day 1, the grey market premium was not as high as it is for Jio Platforms.”
As per IPO Watch, the grey market premium for Jio Platforms was ₹250 as of Wednesday, reflecting a market expectation that the shares will open for trading 22.31% above issue price. GMP is the unofficial extra price at which an IPO’s shares are traded in an unregulated market before they are officially listed on the stock exchange.
Retail participation, even though low, will increase over the next two days, experts say.
“Retail investors typically wait to gauge institutional demand before participating in IPOs. Strong participation from QIBs can lend confidence to retail investors. With no first-day advantage in allotment, retail participation often picks up on the final day when investors see the overall subscription,” said Pranav Haldea, managing director, Prime Database Group.
On Wednesday, Mint reported that financial institutions and brokerages have stepped up efforts to draw retail investors into the ₹30,213-crore IPO, as syndicate bankers aim for strong retail demand and a successful listing. The push comes at a time when the benchmark Nifty 50 has shed more than 10% this year, making it one of Asia’s worst-performing indexes.
