© Reuters.
Signature Global (India), a prominent real estate developer in the Delhi-NCR region, has witnessed a strong response to its initial public offering (IPO), which was launched on Wednesday, September 20, 2023. By Thursday, the second day of bidding, investors had placed bids on 96% of the 1,12,43,196 equity shares offered. This amounted to a total of 1,08,16,206 shares by 2.00 pm, indicating a successful IPO as it received bids for at least 90% of the shares offered.
In an unexpected turn of events, the firm reduced the issue size by approximately 28% from its initial plan to raise Rs 1,000 crore through the primary markets. The shares were offered within a fixed price band of Rs 366-385 ($1 = Rs 83.1) per share with a minimum lot size set at 38 equity shares and multiples thereof. The fresh equity component of the issue amounted to Rs 603 crore (Rs 1 crore = $120,289), with an offer-for-sale (OFS) of up to 3.298 million equity shares worth Rs 120 crore.
Signature Global’s reputation as the largest player in affordable and lower mid-segment housing in areas such as Ghaziabad, Gurugram, and Karnal likely played a role in attracting investor interest. As of March 2023, the company had sold a total of 27,965 residential and commercial units exclusively in the Delhi NCR (NYSE:) region.
Retail investors oversubscribed their allocated portion by two times while qualified institutional bidders (QIBs) subscribed their portion by 2.10 times. However, non-institutional investors showed less enthusiasm with bids covering just nine percent of their reserved portion.
Ahead of the IPO launch on Monday, Signature Global raised Rs 318.5 crore from a group of 19 anchor investors, allocating them 82,72,700 equity shares at Rs 385 per share. The issue was managed by Kotak Mahindra Capital Company, ICICI Securities, and Axis Capital (NYSE:), with Link Intime India serving as the registrar.
Brokerage firms have provided mixed views on the IPO. Sushil Finance expressed concerns about the volatile demand in the real estate industry and advised caution for cash surplus investors. The IPO was priced at a price-to-book (P/B) ratio of 0.8 times based on FY23 net worth, a 43% discount to the industry average of 1.4 times.
Despite previous losses, Signature Global turned profitable at an operating level in FY23. The company’s management remains optimistic about achieving profitability in the short to medium term. Their reliance on residential sales and strong brand recognition through rapid execution and value offerings are expected to support future growth.
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