FII interest in DLF outsmarts net inflow

The initial public offer of realty major DLF Ltd may have failed to hit the right cord with the Indian retail investors, but the interest shown by overseas investors has exceeded the total net inflow into the country's equity market so far in 2007.

The country's largest real estate player, which has raised Rs 9,187.5 crore from the IPO, received bids worth about Rs 25,500 crore from the foreign institutional investors alone, which is higher than about Rs 17,000 crore net FII inflow into Indian equities this year.

According to data available with market regulator SEBI, total FII inflow into equities since the beginning of 2007 stands at Rs 17,432 crore.

The FII demand for DLF public offer was nearly 80 per cent of the total demand of about Rs 32,000 crore recorded by the issue, which is the largest ever IPO so far in India.

However, the total demand for the DLF issue pales in comparison to other major IPOs that have hit the Indian equity market in the recent past.

The demand is, in fact, less than issues which were much less in size, including those from peer firms in the real estate space such as Parsvnath and Sobha Developers.

Public offerings of Mukesh Ambani group company Reliance Petroleum Ltd (RPL), Birla Group telecom firm Idea Cellular, and Mahindra Group company Tech Mahindra have also witnessed higher demand in value terms than DLF.

Incidentally, the capital raised by all these IPOs was less than DLF.

Parsvnath and Sobha Developers issues, which raised between Rs 500-1,000 crore, saw demand worth over Rs 60,000 crore -- nearly double of that for DLF IPO.

Parsvnath IPO was subscribed over 60 times, while that of Sobha received bids for about 114 times of the total issue size.

Besides, Idea Cellular recorded demand for shares worth about Rs 1,42,500 crore against issue size of about Rs 2,500 crore, an oversubscription of about 57 times.

RPL saw demand worth about Rs 1,38,500 crore for its Rs 2,700 crore issue with an oversubscription of about 52 times.

Telecom technology services provider Tech Mahindra also recorded demand worth about Rs 33,500 crore, which was higher than DLF, even though its issue size was less than Rs 500 crore.

However, DLF has garnered higher demand than a number of recent issues such as Maran family promoted Sun TV, hypermarket chain Vishal Retail and the Indian subsidiary of British energy giant Cairn Plc and credit rating agency ICRA.

Sun TV got bids worth about Rs 28,300 crore as against its issue size of about Rs 600 crore, while demand for Vishal, ICRA and Cairn India were below Rs 10,000 crore.

Among other major issues, those of GMR Infrastructure and Global Broadcasting Network (GBN) also received bids worth between Rs 5,000-6000 crore.

Like DLF, the public issue of Cairn India, which gained immense popularity before it hit the capital market, could garner only 1.1 times oversubscription for the Rs 5,260 crore offer.

DLF IPO was subscribed 3.47 times of the size, while the company offered to sell 17.5 crore shares representing a 10.27 per cent of its post-issue capital.

The company has fixed its issue price at Rs 525 a share, at the middle of its price band of Rs 500-550 per share, based on which it would outsmart Unitech Ltd as the country's most valued real estate firm