Attractive price range in the public offering has contributed to the positive investor response
BY Siddharth Kumar
Delhi
Punjab & Sind Bank's (PSB) strategy to set an attractive price range for its initial public offering (IPO) helped the state-run lender in garnering great response with the share sale offer being oversubscribed 50 times by the end of issue on Thursday.
The only unlisted public sector lender, which entered the capital market with its IPO in a price band of Rs 113-120 per share, received excellent response from all categories of buyers, institutional, retail and employees. At the upper end of price range, the issue would fetch Rs 480 crore.
According to the National Stock Exchange website, in the portion reserved for qualified institutional buyers (QIBs), which includes foreign institutional investors and mutual funds, the offer was oversubscribed 49.8 times. Bidding by QIBs closed on Wednesday while Thursday was last date for non-institutional and retail investors.
The demand for PSB's IPO is almost similar to that of Nagpur-based MOIL Ltd, which on Wednesday was listed on the market with a net gain of 24 per cent on day one on the Bombay Stock Exchange (BSE). The state-run manganese ore miner's issue, which closed in the first week of December, was oversubscribed 49.16 times.
"There is strong appetite for investing in the PSU (public sector undertaking) offers," said Arun Kejriwal, founder of the Mumbai-based advisory firm Kejriwal Research & Investment Services Private Ltd. "The PSB issue is being offered at very attractive valuations," he added.
PSB, with 926 branches, is predominantly present in north and central India. The issue, which opened on Monday, was endorsed with "subscribe" tag by many domestic brokerage houses.
"PSB had one of the highest non-performing assets (8.1 per cent) in the industry in FY (fiscal year) 2005, which came down to one of the lowest in the industry (0.4 per cent) in FY 2010," Angel Broking said in note highlighting the bank's asset quality.
Going by share demand, the bank is likely to fix the issue price at the higher end of the price band, said an investment banking official involved in the issue, who did not want to be named.
Overall investment sentiment was also positive on Thursday on Dalal Street, with the BSE benchmark Sensex closing 217 points or 1.1 per cent higher at 19,864.85 points.
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