IndiGo IPO fails to find enough retail investors, employees


The IPO of InterGlobe Aviation – the parent of India’s largest airline company IndiGo – was subscribed 6.1 times on the final day of bidding even though retail investors and employees shunned the hyped IPO. According to the combined data available from BSE and NSE as on 5 PM, IndiGo IPO received bids for 184.39 million shares on the final day of subscription. After allotting 10.88 million shares to anchor investors a day before the IPO, InterGlobe Aviation was selling 30.1 million shares through the public offer. Singapore government-owned GIC, Goldman Sachs, Merrill Lynch, Ruane, Cunniff & Goldfarb, HDFC AMC, Sundaram Mutual Fund, DSP Blackrock Mutual Fund and Fidelity Investments were among the anchor investors.

IndiGo airhostess

Beyond the massive subscription of the massive IPO is the reality of steep IPO pricing and the company’s failure to take retail investors and employees into confidence. High net worth investors placed bids for 20.78 million shares, causing in subscription of 3.57 times. QIBs placed bids for 151.7 million shares, resulting in subscription of 17.8 times but retail investors continued to give the IPO a miss with just bids received for only 11.6 million shares against 13.58 million shares. It was not only retail investors who stayed away from the IPO as subscription was a paltry 12% of the 2.2 million shares meant for employees. The subscription figure would have gone down further if the company had not reduced the employee category by a million shares at the last moment.

InterGlobe Aviation IPO Bidding (as on 29 October 2015)
S. No. Category Shares offered Shares bid for Subscription No. of times
1 Qualified Institutional Buyers (QIBs) 8,522,935 151,707,570 17.80
2 Non Institutional Investors 5,819,746 20,782,650 3.57
3 Retail Individual Investors (RIIs) 13,579,407 11,624,700 0.86
4 Employees 2,200,000 273,660 0.12
Total 30,122,088 184,388,580 6.12


It is not difficult to see why some investor classes decided to stay away. The IPO generally received positive recommendations from analysts, but many brokerage houses highlighted rich valuations for the company which paid excessive dividends to promoters ahead of the public issue. This was a cause big enough for IPO Central to warrant a red flag on the celebrated IPO. The INR10.03 billion interim dividend payment left the company’s net worth in negative territory. Like most other IPOs this year, InterGlobe Aviation IPO also fell victim to the ill-advised policy of leaving nothing on the table for small investors.


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