The final day push came in from qualified institutional buyers (QIBs), who put in bids for 11.5 times the shares reserved for the category. The retail portion was subscribed 1.35 times.
The company has reserved 75% of the issue size for QIBs and 15% for high-net-worth individuals. For retail investors, it has reserved 10% of the issue size.
The company has also kept shares worth Rs 1 crore for its employees and that portion was subscribed 4.87 times. According to people in the know, Honasa Consumer’s employees already have exposure to the company’s stock with almost 70% of the staff holding employee stock options (Esops).
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The IPO, launched on Tuesday, comprises a fresh issue of shares worth Rs 365 crore and an offer for sale of up to Rs 1,336 crore by existing shareholders, at a price band of Rs 308-324 a share. Honasa Consumer had raised Rs 765.19 crore from anchor investors including Abu Dhabi Investment Authority, Fidelity, Goldman Sachs, Capital Group and Norges Bank on Monday.
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In its red herring prospectus, Honasa Consumer has said that it plans to spend Rs 182 crore from its IPO proceeds on advertisement towards “enhancing the awareness and visibility” of its brands, and Rs 20.6 crore for setting up new exclusive brand outlets (EBOs).
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As of June 30, the company had 85 EBOs, which are among the key drivers for the company’s offline strategy. As on March 31, it had 77 EBOs.
Honasa Consumer also plans to spend Rs 26 crore from its IPO proceeds on investment in its subsidiary, BBlunt, for setting up new salons.
“As of June 30, 2023, we had ten salons across three districts in India. We believe there is an opportunity for further growth in the markets in which BBlunt operates as well as in new markets, and in order to build on our track record of expansion, we plan to strategically increase our presence and market share by setting up new salons in India,” the company said in its RHP.
Focus now on listing
With an oversubscribed issue, the focus of the public offering has now moved to the company’s listing, which is expected to happen next week.
Market participants have pointed out sour experience of investors from some previous IPOs of new-age companies. However, in an interview with ET earlier this week, Honasa Consumer cofounder and chief executive Varun Alagh said investors should avoid making a call on the company based on its short-term performance on the stock market.
“If you’re trying to measure performance over 3-6 months, you should not … If you genuinely like a company, stay invested for a few years and measure our performance over the index and that’s what one should hold the company accountable to,” he said.
“For whatever reason, some people would have tasted bad blood but there have been multiple IPOs where there were 70-80% listing gains…that’s markets,” he said.