Rakesh Jhunjhunwala, regarded as the Big Bull of the Indian equity markets, has mastered the art of minting money through investment in stock market. While the billionaire investor had a string of successful investments such as Nazara Technologies, Barbeque Nation, and A2Z Infra Engineering, his recent portfolio stocks Metro Brands and Star Health and Allied Insurance Company struggled to sail through.
Mumbai-based footwear retailer Metro Brands is the second company after Star Health and Allied Insurance in Jhunjhulwala's portfolio, which failed to impress investors on listing day. Demand for the company's shares remained weak as its initial public offering (IPO) garnered muted response from investors.
Here's a quick performance review of Jhunjhunwala-backed IPOs since listing on the Dalal Street.
Shares of Metro Brands made a weak debut at Dalal Street on Wednesday, with the stock price opening at ₹436 apiece on the BSE, a discount of 12.8% to its offer price of ₹500. On the NSE, the shares were listed at a discount of 12.6% at ₹437 per share. The stock commanded a market capitalisation of ₹13,305 crore on BSE at the time of reporting.
Post listing, the stock declined further by 14.78% to hit an intraday low of ₹426.10 on the BSE. During the day’s trade so far, the stock touched a high of ₹495. There was spurt in volume trade as 4.82 lakh shares changed hands over the counter.
In contrast, the BSE Sensex was trading 355 points or 0.6% higher at 56,674 at the time of reporting.
The weak listing of multi-brand footwear retailer was in line with market expectation as it traded lower in the grey market ahead of the debut on the domestic exchanges. Despite being backed by ace investor Rakesh Jhunjhunwala, the IPO received lower-than-expected support from investors as the offer was subscribed just 3.64 times.
The ₹1,367.5 crore IPO had a price range for the offer at ₹485-500 per share, which opened for subscription on December 10 and closed on December 14. The IPO comprised fresh issue of ₹295 crore and an offer for sale (OFS) of up to 2.14 crore equity shares, which will be used to meet expenditure for opening new stores of the company, under the 'Metro', 'Mochi', 'Walkway' and 'Crocs' brands. A part of the capital raised will also be used for general corporate purposes. Ahead of the IPO, the company raised a little over ₹410 crore from anchor investors.
As per the offer document, Metro Brands promoters will own 75.9% stake in the company post listing, while Rakesh Jhunjhunwala will hold 13.9% shares in the Mumbai-based firm, which operates 598 stores in 136 cities across India.
Star Health and Allied Insurance
Star Health and Allied Insurance, the country’s largest private health insurer, has delivered a negative return of 11.5% since its listing on December 10. The insurer made its market debut at ₹848.8, 5.69% lower to the IPO price of ₹900 apiece on the BSE. On the NSE, it got listed at a discount of 6.11% at ₹845 per share.
On Wednesday, Star Health shares rose as much as 1.45% to hit an intraday high of 809.90 against previous close price of 798.30 on the BSE.
As per the Red Herring Prospectus (RHP) filed with SEBI, Rakesh Jhunjhunwala owns 14.98% stake, or 8.28 crore equity shares, in the company.
Star Health has raised ₹6,400 crore in its IPO at a price range of ₹870-900 apiece, with issue subscribing by only 79% during the three-day book-building process. Given the muted response from investors, especially high net-worth investors (HNIs), the company was forced to cut down the IPO size to ₹6,400 crore, as compared to the initial target of ₹7,249.18 crore. The company raised ₹2,000 crore by issuing fresh equity shares and ₹4,400 crore via offer for sale (OFS) from existing promoters and shareholders.