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Flying high...
Last month, the initial public offering (IPO) of InterGlobe Aviation Ltd, which owns India’s largest and most profitable airlines, IndiGo Air, was hugely oversubscribed.

The 3 day bonanza ended on the last Thursday of October 2015 with interest from retail investors (90 per cent of the shares earmarked for them being acquired) picking up towards the last day of the Rs.3130 crore worth IPO.

The shares set aside for qualified institutional buyers or QIBs in short, was subscribed more than 17 times. Earmarked high net-worth individuals’ (HNIs) shares were subscribed by about 3.6 times while the employees of the company bought 12 per cent of the shares offered.

Worthy valuations

IndiGo was approximately valued at $4 billion and most of the bids from the public at large came in at the upper end of the Rs. 700-765 price band, making this one of the biggest IPOs in recent times (next only to the Bharti IPO few years ago which was pegged at just over Rs. 4000 crore). The company has finalised allocation of about Rs. 800 crore for anchor investors. The anchor book being  a barometer of institutional investor interest – and the fact that these investors are offered shares a day before the IPO- has sent out a positive message to the general public who have lapped up the IPO in hordes. It wasn’t just the anchors, many HNIs like R  Jhunjhunwala have bought shares and this only proves that the liquid Indian market is ready for good quality IPOs with correct valuations.


Welcome change...

Speaking to the media after the IPO, President of the company, Aditya Ghosh, said: “we are overwhelmed with the response. Many of these investors are the very best of the best. We take a lot of pride in the fact that we have put the Indian airline industry back on the global map. But you know, that’s in the past now. Our track record has brought them to us. But now it’s up to me and my team to deliver on their trust and thank them for their faith with our future performance.”

IndiGo’s IPO is the largest initial share sale in India since 2012. You can read our analysis on how the airline has been successful by being prudent in its operations and budgets here:

http://www.industrialeconomist.com/page.php?page=8&&cid=1246

We think the Coffee Day and IndiGo IPOs are just the beginning as investors and companies are again warming up to the idea of active market participation. But it still has to be seen how these companies perform as public enterprises in the long run, overall though, this is a welcome change for the markets that have been bland and inactive for a while now.

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