DB Corp issue over-subscribed 39 times

By Rahul Sharma , afaqs!, New Delhi | In Media Publishing | December 16, 2009
The IPO from the publishers of Dainik Bhaskar received an encouraging response

The IPO of DB Corp Ltd., publishers of the second largest daily newspaper in the country, Dainik Bhaskar, was oversubscribed 39.54 times. A total of 58.92 crore bids were received against the total issue size of 1.49 crore equity shares on offer, as per data available on the National Stock Exchange (NSE) website.

Stock analysts say that the response has been very encouraging, especially if one looks at the response to the recent IPOs of Godrej Properties and JSW Energy. "In that background, it's fantastic. Even then, the response from the retail investor has been lukewarm. Till the time retail investors do not come, depth will not come into the market," says Jagannadham Thunuguntla, Equities Head at SMC Capital.

As per data on the NSE site, qualified institutional buyers (QIBs) oversubscribed 68.47 times; non-institutional investors or high networth individuals (HNIs) oversubscribed 25.86 times; whereas retail investors subscribed only 3.42 times the total meant for them.

The issue, which opened on December 11 at a price band of Rs 185 - Rs 212, closed yesterday. At this price band, the company hopes to take in Rs 336-385 crore. The stock will be listed on both Bombay Stock Exchange (BSE) and NSE.

"I feel that the stock is attractively valued at Rs 212. The stock is not for a short-term trader, but for a long-term one. If one looks at the print and media listed companies, it is the only one present in three languages. Wherever they entered, they have had a huge subscription. There is a long-term story in the company. The listing should be in the range of Rs 220-224," says Rohit Maheshwari, research analyst at KR Choksey Securities.

However, Thungutla says that even though the response to the IPO has been very encouraging, he is not sure whether the listing will be equally good.

The issue comprises 10 percent of the fully-diluted post issue capital of the company. Of this, 7 percent is fresh offering and the remaining 3 percent is on sale by Cliffrose Investment Ltd.

Before the IPO was launched, DB Corp had allocated 32.71 lakh shares at Rs 212 per equity share of Rs 10 each to nine anchor investors. This translates to approximately Rs 69.35 crore.

The anchor investors are: Government of Singapore, FID Funds (Mauritius) Ltd, FIL Trustee Company Pvt Ltd, Normura Funds Ireland, ICICI Prudential Life Insurance, Reliance Capital Trustees Co Ltd., IDFC Classic Equity Fund, India Capital Fund and BNP Paribas Arbitrage, as per information given by DB Corp to the exchanges.

Through the money raised, the company plans to set up new publishing units, upgrade the existing plant and machinery, enhance brand image through sales and marketing, reduce working capital loans and prepay existing term loans. The company has a debt of Rs 130 crore.

DB Corp has seven newspapers, 48 newspaper editions and 128 sub-editions in three languages (Hindi, Gujarati and English) across 11 states. It also has 17 radio stations under the My FM brand.

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