Ather Energy IPO: EV maker raises ₹1,340 cr from anchor investors; issue to open today

The ₹2,981-crore initial public offering (IPO) of Ather Energy will open for subscription today, ending two months of dry spell in the primary market. However, the buzz around the IPO is low as suggested by falling grey market premium (GMP) of electric two-wheeler (E2W) maker’s shares in the unlisted market, which can be attributed to various factors, including the company's financial health and lack of public excitement amid fragile market conditions.

The Ather Energy IPO has received mixed reviews from brokerage houses, with some, including SBI Securities, recommending "Avoid", citing factors like ongoing losses, high valuation, and dependence on a specific region. Despite being a leading electric two-wheeler manufacturer, Ather's financial performance, including losses in recent years, is a major concern for investors, while brokerages remained skeptical about its imports from specific countries, including China, amid ongoing trade tensions between U.S. and China.

On the other hand, Bajaj Broking has recommended subscribing to the issue with a long-term perspective; while Arihant Capital and Ventura Securities have suggested subscribing to the Ather Energy IPO for listing gains. 

IPO receives good response from anchor investors  

Ahead of opening of the IPO today, Ather Energy on Friday raised ₹1,340.04 crore from 36 anchor investors at the upper end of the price band at ₹321 per equity share. The company allotted 4.18 crore equity shares to anchor investors.

As per the exchange data, anchor investors include marquee investors SBI MF, Franklin Templeton Global, Aditya Birla Sun Life MF, Abu Dhabi Investment Authority (ADIA), Singapore headquartered global asset manager Eastspring Investments participated in the anchor book. Among others, ICICI Prudential MF, Invesco MF, global asset management firm Morgan Stanley Investment Management (MSIM), Aditya Birla Sun Life Insurance, US based Pacific Investment Management Co (PIMCO), Samir Arora backed Helios MF and Helios Capital, ITI MF, Union MF, Tata Investment, Subhkam Ventures, a privately managed family office, LMR Partners, a British multi-strategy investment firm and Ovata Capital, a Hong Kong-based investment manager were also allocated shares.

GMP drops to zero

The GMP of Ather Energy shares dropped to zero ahead of opening of the IPO. At the time of reporting, the EV stock as commanding a GMP of ₹0 in the unlisted market, according to investorgain.com. The GMP has dropped sharply from ₹17 on April 22, to ₹10 on April 23, and further on ₹3 on April 26, showing a discounted trend to the IPO price.

Key details about IPO:

The electric vehicle maker Ather Energy has set a price band of ₹304-321 per share for its IPO, which is a combination of fresh equities and offer for sale (OFS) by selling shareholders. The three-day IPO will close on April 30, while the shares are scheduled to list on domestic stock exchanges on May 6.

The IPO of Tarun Mehta and Swapnil Jain co-promoted firm comprises of fresh equities worth ₹2,626 crore and OFS of up to 1.1 crore shares, which at the upper end of the price band amounts to around ₹355 crore.

As a result, the total issue size is calculated to be around ₹2,981 crore, which is sharply lower than earlier estimates of ₹4,000 crore. The EV startup is seen raising money at market valuation of ₹12,000 crore, down from ₹14,000 crore projected earlier.

The Bengaluru-headquartered pure-play EV company has set a price band of ₹304-321 per share for its IPO.

The lot size is 46 equity shares and in multiples thereafter, which means minimal application amount for one lot for retail investor would be ₹14,766 (at upper end of price band).

The company has reserved up to 75% of public issue for qualified institutional buyers (QIB), 15% for non-institutional Institutional Investors (NII), and remaining 10% for retail investors. The employee quota has been reserved up to 100,000 equity shares, which will be offered at a discount of ₹30 per equity share.

The electric scooter startup, backed by investors including Hero MotoCorp, Sachin Bansal, Binny Bansal, Tiger Global, and the National Investment and Infrastructure Fund (NIIF), proposes to utilise the net proceeds of the fresh issue towards funding of capital expenditure requirements for establishment of an electric two-wheeler factory in Maharashtra. A part of the capital will be invested in research and development; repayment or pre-payment, in full or part, of certain borrowings availed by the company; expenditure towards marketing initiatives; and general corporate purposes.

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