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Jet IPO oversubscribed in 10 min
Against the offer of 1.72 crore equity shares, bids were received for 3.11 crore shares.
Jet Airways (India) Ltd's IPO of at least $375 million was fully sold within minutes of opening on Friday, as investors rushed to the first airline issue in a decade on hopes of robust travel growth, bankers said.
The initial public offer (IPO) for 17.27 million shares, or 20 per cent of the expanded equity, was subscribed 1.5 times in 10 minutes at the upper end of the offered range of Rs 950 to Rs 1,125, a banker working on the mandate told Reuters.
"All bids have come at the top end," the banker said.
At the top end, Jet would be valued at about Rs 97 billion ($2.2 billion), and it is expected to raise between Rs 16.4 billion and Rs 19.4 billion ($375 million - $444 million) in the offering.
"Buoyant economic growth, increasing leisure travel and changing demographics and habits are propelling fast growth in domestic air travel," CLSA Emerging Markets said in a report released this week.
"Jet is best positioned to exploit the opportunities given its high service standards, brand equity and track record," it added.
Founded by London-based Naresh Goyal, a former travel agent, the company has grown rapidly since it began operations in 1993 and overtook state-owned Indian Airlines Ltd, which for decades was a monopoly provider of domestic air services.
CLSA forecasts Jet's earnings to expand at a compounded average growth rate of 18 per cent between the financial years 2005 and 2007, with growth in the year ending March 2006 at 26 per cent.
Other competitors include unlisted Air Sahara and Air Deccan. Royal Airways Ltd, formerly called ModiLuft and which folded in the mid-1990s, will launch services in May.
Strong demand for Jet's IPO drove Royal shares more than seven per cent higher to Rs 59 on Friday morning, while mid-size Taneja Aerospsa and Aviation Ltd that makes light transport aircrafts rose five per cent to Rs 32.35.
The Jet Airways IPO is the first in a series of share offers scheduled by Indian companies this year as they seek to raise funds to meet the needs of a rapidly growing economy.
Last year, Indian companies raised about $2.9 billion through IPOs and an additional $3.9 billion through public share issues. Merchant bankers expect this year's tally to outpace that level.
