Vishal Mega Mart's $943 mln India IPO fully subscribed, retail investor demand tepid (updated)

Avenue Supermarts

12/12/2024 09:41

* 
      IPO fully subscribed on day 2; retail investor demand
tepid
    

        * 
      Demand hit by high retail shares on offer, many
IPOs-analyst
    

        * 
      Co likely to benefit from focus on smaller cities-analyst
    

        * 
      Stock expected to begin trading on Dec. 18
    

  
 (Adds analysts comments, details of bids, background on retail
chain operators through out)
    By Nandan Mandayam and Kashish Tandon
       Dec 12 (Reuters) - Indian budget retailer Vishal Mega
Mart's $943 million IPO was fully subscribed on the second day
of bids on Thursday, though a flood of recent offerings dulled
retail investors' appetite for a company analysts say is immune
to its bigger rivals' problems.
    The issue got bids for 1.17 billion shares at the end of the
second day of the three-day process, per exchange data, versus
the 756.8 million shares on offer from existing shareholder
Samayat Services. Vishal Mega Mart is not selling new shares.
    The company, which sells clothes for as low as 99 rupees
(just over $1) and groceries, is a relatively small player in
India's $600 billion grocery and supermarket industry that is
led by the likes of Reliance Retail, DMart  AVEU.NS  and Tata
Group's Star Bazaar.
    The big players, however, have struggled with high inflation
curbing consumer demand and the rise of quick commerce companies
as major rivals.
    Meanwhile, Vishal Mega Mart, with 70% of its stores in
smaller cities where quick commerce is nascent, is relatively
insulated, said Narendra Solanki of brokerage Anand Rathi.
    "Vishal Mega Mart is a proxy for rising aspirations in
India's smaller towns and cities and stands to benefit from such
customers upgrading to branded products from unbranded ones."
    Still, retail investors were not as hungry for the IPO. The
shares allocated to non-institutional investors were subscribed
nearly four-fold, but the retail portion was subscribed just
over one-fold.
    That was due to the high number of offerings this week and
Vishal Mega Mart reserving about 35% of shares for retail
investors, the high end of the normal 10%-35% band, said
Solanki.
    The recent IPO offerings include fintech firm MobiKwik's
 ONEM.NS  $67.4 million IPO on Wednesday, which was fully
subscribed in just one hour. Retail investors had bid for 65
times the shares on offer, as on the second day of bidding.
    India's IPO market has been bustling, with over 300
companies having raised $17.5 billion so far this year, more
than double the amount raised last year, LSEG data showed.
    Vishal Mega Mart's shares are likely to begin trading on
Dec. 18.
 
 ($1 = 84.8600 Indian rupees)

 (Reporting by Nandan Mandayam, Kashish Tandon and Chris Thomas
in Bengaluru, writing by Indranil Sarkar; Editing by Savio
D'Souza and Janane Venkatraman)
 ((Kashish.Tandon@thomsonreuters.com; 8800437922;))