FPIs heed custodians' advice, give IEX IPO a miss

Overseas investors gave the initial public offer of Indian Energy Exchange a miss after custodians advised them against participating in the issue. Lack of clarity on whether foreigners are allowed to invest in the IPO of a power bourse was cited as the main reason, said four people familiar with the matter.

The Rs 1,001 crore IPO of IEX, which ended on Wednesday, was subscribed 2.3 times on Wednesday.

IEX reduced the anchor investor allocation to 7.89 lakh shares from 18.19 lakh shares earlier after it had to scrap the allotment given to foreign portfolio investors (FPIs).

"Custodians advised their foreign clients to withdraw from this IPO because of there is uncertain ty whether FPIs are allowed to participate in a power exchange IPO. Nobody wanted to take a chance," said a person familiar with the matter.

E-mail queries sent to IEX and Kotak Investment Banking -one of the bankers -remained unanswered till the time of going to press.Axis Capital and IIFL, which also managed the issue, declined comment.

As per the addendum notice sent by the company to exchanges, certain custodians communicated to the book running lead managers following the receipt of bids from anchor investors that FPIs will not be eligible to participate in the offer.

No allotment will be made against bids received from FPIs in the anchor investor portion and in the offer. The 10.30 lakh shares that were originally allocated during the anchor investor bid period will be made available in the portion set aside for qualified institutional buyers, the notice had said.

The revised anchor allotment list showed SBI Magnum Multicap Fund and Birla Sunlife Trustee Company got 13.83 per cent each in the anchor allotment. ICICI Prudential, UTI-Dividend Yield Fund, DSP BlackRock, Sundaram Mutual Fund, Axis Mutual Fund Trustee and IDFC Infrastructure Fund were also among the anchor investors.

They were allotted the shares at upper end of the IPO price band of rs 1,6451,650 per share. In total, IEX raised Rs 130.20 crore from anchor investors.