Afcons Infrastructure IPO Set for its Stock Market Debut on November 4
Afcons Infrastructure’s IPO (Initial Public Offering) is all set to list on the stock market this Monday, November 4. Investors who were allocated shares will find them in their demat accounts by now, with refunds already processed for those who didn’t receive any shares.
The IPO, which was open for subscription from October 25 to October 29, received a mixed response. According to the BSE data, the IPO was subscribed 2.63 times overall, meaning demand exceeded supply. However, subscription rates varied among different types of investors. Retail investors, who are individual buyers, subscribed at 94% of the allocated amount, while non-institutional investors (NIIs) – typically larger, wealthier investors – subscribed 5.05 times their allotted portion. Qualified institutional buyers (QIBs), like banks and mutual funds, subscribed 3.79 times. Employees of the company also subscribed 1.67 times their reserved portion.
In the early days of the IPO, the response was slow, with only 10% subscribed on day one and 36% by day two. But interest picked up on the final day, especially from the NII segment, which helped boost the subscription numbers. Ahead of the IPO, Afcons raised approximately Rs.1,621 crore from anchor investors large and reliable investors who help gauge market interest.
The shares in this IPO were split so that 50% went to QIBs, 15% to NIIs, and 35% to retail investors. Employees were given a discount of Rs.44 per share, and the price was set between Rs.440 and Rs.463 per share, with a minimum purchase of 32 shares.
Market experts noted the challenges Afcons faced, particularly with limited retail investor interest, meaning most individual investors who bid at the cutoff price received their shares. NIIs, however, showed strong support and contributed greatly to the final numbers, subscribing over five times their allocation.
Some analysts think the IPO’s lukewarm response may be due to the parent company’s financial challenges. Afcons’ parent company is carrying a large amount of debt and is in the midst of a business restructuring, which led it to sell a significant portion of Afcons’ shares to raise funds and manage debt. While this strategy could stabilize the parent company, it may have discouraged short-term investors who generally prefer a quicker return.
Because of these factors, experts are predicting that Afcons might have a modest listing, with its share price likely to hover around 5% above or below the IPO price. Today’s grey market premium (GMP) is Rs 1, meaning that Afcons shares are expected to trade around Rs.464 per share only, slightly higher than the IPO price of Rs.463.
The funds raised from the IPO will be used by Afcons to purchase construction equipment (Rs.80 crore), cover working capital needs (Rs.320 crore), and pay down debt (Rs.600 crore). The remaining amount will go towards general corporate needs.
The IPO is managed by a group of financial advisors, including ICICI Securities, Dam Capital Advisors, Jefferies India, Nomura Financial Advisory, Nuvama Wealth Management, and SBI Capital Markets, with Link Intime India Private Ltd acting as the registrar.
With its debut just days away, Afcons Infrastructure’s listing is expected to attract attention, especially from long-term investors looking for growth opportunities.
