Indowind IPO hit by QIB exodus

Another small-sized initial public offering (IPO) has fallen prey to uncertain market conditions and overpricing. Indowind Energy is the latest victim of last minute withdrawal of large-sized bids by qualified institutional bidders (QIBs).

The IPO had attracted a bidding of about 1.3 times just before the offer closed on August 24. But, a sudden bout of withdrawals resulted in a fall in subscription to below 90% as the bidding was coming to a close, which raised concerns, particularly among retail investors.

Merchant bankers believe small investors are being misled by the initial ‘positive’ response from QIBs, who can spoil the equation if they opt to withdraw.

Sources said on the very first day around 63 lakh shares of Indowind were bid on behalf of 2-3 FIIs, leading to a 100% subscription of the QIB portion. Another lot of 49 lakh shares was bid by a few other institutional investors on the same day.

However, the application for the 63 lakh shares was withdrawn just before the closing of the issue, resulting in a fall in the QIB subscription. This prompted retail investors to also withdraw their applications before the allotment was finalised.

On the poor response to the IPO, a merchant banker told ET, the pricing of Indowind was slightly aggressive and the market conditions were also uncertain at the time of the issue. Despite a firm Sensex during the bidding period, investors remained unconvinced about the recovery and remained cautious, he said.

Indowind offered a total of 1.25 crore shares of Rs 10 in the price band of Rs 55-65 per share. UTI Securities was the book-running lead manager for the issue, while Canara Bank was the co-book running lead manager