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Shemaroo IPO gets 1.01 times subscribed on Day 2

MUMBAI: Even as institutional investors continue to remain cautious about Shemaroo Entertainment Ltd’s initial public offering (IPO), the issue was subscribed for 1.01 times on the second day.

The film and content business company, which is looking to raise Rs 120 crore (Rs 1.20 billion) from the IPO, witnessed steady build-up of retail investors support on Day 2.

As per information available on the bourses, Shemaroo’s IPO received bids for over 57.59 lakh (5.76 million) shares, compared to 57.20 lakh (5.72 million) shares on offer.

The retail individual investors’ category was subscribed for 1.77 times.

However, non-institutional investors gave a tepid response with only 0.06 times subscription. The portion for qualified institutional buyers (QIBs) also saw a mere 0.23 times subscription.

Shemaroo has entered the capital market with an IPO price band of Rs 155–170 per share. The IPO, which opened on Tuesday, will close on 18 September.

On Monday, the eve of IPO offering, the portion of anchor investors was fully subscribed for by domestic mutual funds. The company managed to raise Rs 36 crore (Rs 360 million) from nine anchor investors, including Birla Sunlife and HDFC MF who were allotted a total of 21.17 lakh (2.12 million) shares at Rs 170 apiece.

Of the 17.21 lakh (1.72 million) equity shares of face value of Rs 10 each for cash which were lapped up retail investors so far, 14.08 lakh shares (1.41 million) were bid at the cut off-price of Rs 170.00 per share. The remaining shares witnessed varying price bids between Rs 169.00 per share to Rs 155.00.

Meanwhile, the response from the domestic institutional investors (mutual funds) has developed cold feet on Day 2, after having found liking for the issue on the previous day. A couple of domestic funds have subscribed for a formidable chunk that is allocated under the category.

As many as 15.48 lakh (1.55 million) equity shares were bid by domestic institutional investors.

Shemaroo is the first company to benefit from the tweaking of norms by the SEBI recently to double the investment bucket for anchor investors.

The proportion of the anchor investors was enhanced with the objective to increase their commitment. Apparently, the anchor investors are allowed to bucket 60 per cent from the earlier requirement of 30 per cent of the institutional portion.

The promoters will retain majority control, but their stake will be diluted by 20 per cent. In a written reply to TelevisionPost.com query earlier, the company had said that following the issue promoter holding will be approximately 65 per cent, depending on the discovered issue price. It further clarified that promoters are not divesting any stake through the IPO.

While responding to a query on IPO pricing, it attributed the same to fundamental factors besides peer group multiple.

For the previous fiscal (FY2014), Shemaroo’s EPS stood at 14.08. This translates into an implied PE multiple of 12.1 times at the top end of the price band (Rs 170 per share). In the last three years, it recorded an average RoNW of 16 per cent and NAV/share of Rs 89.4 as of 31 March 2014.

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Shemaroo Entertainment sets price band for Rs 120 crore IPO