Utkarsh Small Finance Bank IPO subscribed 101.91 times at close
Utkarsh Small Finance Bank IPO ₹500 crore , consisted entirely of a fresh issue of shares for the full amount. There was no offer for sale component in the IPO, so the entire IPO is EPS and capital dilutive. The IPO saw very robust response on Day-1 and Day-2 of the IPO and closed with very healthy subscription numbers at the close of Day-3 across all the categories of the IPO subscriber base. In fact, the company got fully subscribed on the first day of the IPO itself with the retail and HNI portion getting substantially oversubscribed on the first day. Only QIB portion got fully subscribed on the second day.
As per the combined bid details put out by the BSE at the close of Day-3, Utkarsh Small Finance Bank Ltd IPO was subscribed at 101.91X overall, with higher oversubscription coming from the QIB segment, followed by the HNI / NII segment and the retail segment in that order. In fact, both the institutional segment and the HNI / NII segment saw some good traction on the last day. Typically, the HNI / NII portion sees corporate and funding applications on the last day while the QIBs put their bids on the last day of the IPO. Retail portion showed a steady from the start, probably due to the low price of the IPO. Let us first look at the break-up of the 2 crore shares offered in the IPO.
|Anchor Investor Shares Offered||8,91,00,000 shares (44.55%)|
|QIB Shares Offered||5,94,00,000 shares (29.70%)|
|NII (HNI) Shares Offered||2,97,00,000 shares (14.85%)|
|Retail Shares Offered||1,98,00,000 shares (9.90%)|
|Employee Shares Offered||20,00,000 shares (1.00%)|
|Total Shares Offered||2,00,000,000 shares (100%)|
As of close of 14th July 2023, out of the 1,205.43 lakh shares on offer in the IPO, Utkarsh Small Finance Bank Ltd saw bids for 1,22,847.15 lakh shares. This implies an overall subscription of 101.91X. The granular break-up of subscriptions was in favour of the QIB investors followed by the HNI / NII investors and then the retail portion in that order. QIB bids and NII bids typically gather most of the momentum on the last day, and that was the case in this issue also in the case of QIB bids and the HNI / NII bids. In fact, the NII bids picked up a lot of momentum on the last day and about added to its heft of the previous days, largely through corporate investments and the funding investments.
Utkarsh Small Finance Bank Ltd IPO Subscription Day-3
|Qualified Institutional Buyers (QIB)||124.85 Times|
|S (HNI) ₹2 lakhs to ₹10 lakhs||75.96|
|B (HNI) Above ₹10 lakhs||84.48|
|Non Institutional Investors (NII)||81.64 Times|
|Retail Individuals||72.10 Times|
Let us first talk about the anchor allotment, which his carved out of the QIB allocation of shares. On 11th July 2023, Utkarsh Small Finance Bank Ltd completed the bidding for its anchor allocation. There was an enthusiastic response as the anchor investors participated through the process of book building. A total of 8,91,00,000 shares were allotted to a total of 20 anchor investors. The allocation was done at the upper IPO price band of ₹25 per share which resulted in an overall allocation of ₹222.75 crore. The anchors have already absorbed 44.55% of the total issue size of ₹500 crore, which is indicative of the robust institutional demand.
Here is a list of the 15 anchor investors who got allotted at least 2% of the total anchor allocation individually. The entire anchor allocation of ₹222.75 crore was spread across 20 major anchor investors. The top 15 anchor investors listed below accounted for 95.20% of the total anchor allocation of Utkarsh Small Finance Bank Ltd.
|Anchor Investor||No. of Shares||% of Anchor Portion||Value Allocated|
|ICICI Prudential Banking & FS Fund||79,99,800||9.00%||₹20.00 crore|
|Mirae Asset Banking and FS Fund||79,99,800||9.00%||₹20.00 crore|
|Goldman Sachs India Equity Portfolio||79,99,800||9.00%||₹20.00 crore|
|MIT Retirement Plan||79,99,800||9.00%||₹20.00 crore|
|ICICI Prudential Life Insurance Co. Ltd||79,99,800||9.00%||₹20.00 crore|
|SBI Life Insurance Co. Ltd||79,01,700||8.90%||₹19.75 crore|
|Kotak Mahindra Multicap Fund||71,27,500||8.00%||₹17.82 crore|
|Founders Collective Fund||55,99,800||6.30%||₹14.00 crore|
|Winro Commercial India Ltd||55,99,800||6.30%||₹14.00 crore|
|ABSL Banking and FS Fund||48,00,000||5.40%||₹12.00 crore|
|SBI Long Term Advantage Fund||43,99,800||4.90%||₹11.00 crore|
|Edelweiss Recently Listed IPO Fund||30,00,000||3.40%||₹7.50 crore|
|ABFL Retirement Fund||24,00,800||2.70%||₹6.00 crore|
|SBI Optimal Equity Fund||20,00,100||2.20%||₹5.00 crore|
|AG Dynamics Fund Ltd||20,00,100||2.20%||₹5.00 crore|
Data Source: BSE Filings
Now for the balance QIB subscription. The QIB portion (net of anchor allocation as explained above) has a quota of 645.65 lakh shares of which it has got bids for 80,612.60 lakh shares at the close of Day-3, implying a subscription ratio of 124.85X for QIBs at the close of Day-3. QIB bids typically get bunched on the last day and while the heavy demand for the anchor placement had given an indication of the institutional appetite for the Utkarsh Small Finance Bank Ltd IPO subscription overall, the actual demand did turn to be quite robust for the IPO.
HNI / NII Portion
The HNI portion got subscribed 81.64X (getting applications for 26,356.26 lakh shares against the quota of 322.83 lakh shares). That is a rather strong response at the close of Day-3 largely because this segment normally sees the maximum response bunched on the last day. Bulk of the funded applications and corporate applications, come in on the last day of the IPO, and that was exactly visible as the overall HNI / NII portion just about added to its heft on the last day. HNI portion did eventually manage a very good subscription level.
Now the NII/HNI portion is reported in two parts viz. bids below ₹10 lakhs (S-HNI) and bids above ₹10 lakhs (B-HNI). The bids above the ₹10 lakh category (B-HNIs) typically represents most of the major funding customers. If you break up the HNI portion, the above ₹10 lakh bid category got subscribed 84.48X while the below ₹10 lakh bid category (S-HNIs) got subscribed 75.96X. This is just for information and is already part of the overall HNI bids explained in the previous para.
The retail portion was subscribed just 72.10X at the close of Day-3, showing very robust retail appetite. It must be noted that retail allocation is 10% in this IPO. For retail investors; out of the 215.22 lakh shares on offer, valid bids were received for only 15,518.19 lakh shares, which included bids for 13,194.04 lakh shares at the cut-off price. The IPO is priced in the band of (₹23-₹25) and has closed for subscription as of the close of Thursday, 14th July 2023.
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