IPO of Ortel Communications receives tepid response

Mumbai: Private equity investor New Silk Route-backed Ortel Communications Ltd, which launched its initial public offering (IPO) on 3 March, has seen tepid response from investors.

add_main_imageNew Silk Route failed to sell all the shares it wanted to.

According to BSE, 6.44 million shares of the company were reserved for institutional buyers, which saw a subscription of 6.49 million, or 1.01 times. NextMAds

The non-institutional investors and retail investors segments saw subscription of 0.09 times and 0.39 times, respectively.

Overall, the issue saw a subscription of 0.75 times only.

“Ortel has successfully raised its entire primary capital requirement as stated in the IPO Red Herring Prospectus, along with providing partial exit to New Silk Route,” a spokesperson of Kotak Mahindra Capital Co. Ltd said in a statement. Kotak Mahindra Capital is the lead manager to the issue.

“The net under-subscription in the HNI (high net-worth individual) and retail segments will reduce the offer for sale component by New Silk Route,” the statement said.

New Silk Route had put on offer six million shares held by it in the firm, said V. Jayasankar, senior executive director and head of capital markets at Kotak Investment Banking. It planned to hold on to 2.1 million shares.

In an email response, New Silk Route declined to comment for the story.sixthMAds

“There is a possibility of the stock price tanking on listing if they go ahead with the issue, given the poor response,” an investment banker said, requesting anonymity.

The tepid response to the Ortel Communications offer raises questions on the appetite of investors in the primary market, which is expected to see at least another four IPOs this month.

At least five firms, including Ortel, were looking to raise as much as ₹ 2,000 crore through IPOs in March, Mint reported on 3 March.