Ashok happy with level of oversubscription

Softlogic Holdings Chairman Ashok Pathirage yesterday expressed satisfaction over the company’s Rs. 4 billion IPO meeting, with 4.2 times oversubscription given the depressed market condition.

The IPO, which was the biggest in six years since Dialog’s, saw applications worth Rs. 16.9 billion received, reflecting a 4.22 times oversubscription.

“Considering the bearish market conditions, we are happy with the level of response as well as the profile of new investors who have come on board,” Pathirage told the Daily FT.

There had been a high 23,476 applications via bank drafts and cheques requesting 142.5 million shares worth Rs. 4.13 billion. Therefore, from a largely retail investor perspective, the Softlogic IPO had been entirely snapped up by this segment. The IPO also drew 155 bank guarantees requesting 441.1 million shares worth Rs. 12.79 billion.

Prior to the IPO most analysts expected minimum five times oversubscription for Softlogic IPO though some maintained it was overpriced. Softlogic also fell short vis-à-vis Expolanka’s 4.79 times oversubscription, though the former’s size was bigger in comparison to the Rs. 2.4 billion of the latter. Of the two, Softlogic was naturally more aggressive and visible whilst its core businesses also have some highly popular global brands.

Analysts opined that given the depressed market conditions as well as the lack of free ride on bank guarantees, the two issues managing to be oversubscribed irrespective of the levels was a commendable achievement. The two has also drawn the more mature set of investors looking for medium to long-term returns, with the rest more busy with speculative stocks already listed and having a free but risky run.

The exemplary founders’ decision to go public has been welcomed as well since the two conglomerates will help raise the profile of the Colombo bourse going forward.