Real estate firm DLF Ltd priced its IPO in the middle of the indicative price range due to muted retail interest, bankers said on Friday, valuing the country's largest developer at nearly $22 billion.
The company raised 91.88 billion rupees via a sale of 175 million shares, or 10.27 per cent of the firm, at 525 rupees a share after the issue, which closed on Thursday, was subscribed 3.5 times the offer.
While the institutional portion of the initial public offer was subscribed more than five times, the retail portion only just managed full subscription, bankers said.
The company had set a band of 500-550 rupees a share after discussions with bankers, far below the 600 rupees it was expecting due to slowing growth in the real estate industry as a result of rising interest rates.
Asked why the price was set in the middle of the range, one banker said: "We wanted to leave something on the table for the investors."
Analysts were divided on the pricing.
"DLF is the best way to get exposure to Indian real estate," said Edelweiss Securities in a report before the IPO.
Although the property market is slowing at the moment, analysts say growth is likely to be sustained long-term due to India's economic boom, which is driving demand for office, retail and residential space.
First Global Securities said DLF was priced at a premium, noting: "A majority of the global real estate stocks in Hong Kong and Singapore trade at a 10-30 per cent discount to their net present value."
The bankers, Kotak Mahindra and DSP Merrill Lynch, marketed the issue aggressively with unprecedented commissions to brokers and distributors.
DLF abandoned an IPO last year after a steep market sell-off and a tussle with minority shareholders. It plans to build malls, residential complexes and special economic zones.
Other bankers to the issue were Lehman Brothers, UBS, ICICI Securities, Citigroup, Deutsche Bank and SBI Capital Markets.