Published by: Vivek Dubey
The initial public offering (IPO) of India's leading drone maker Ideaforge opened for subscription on Monday (June 26) and the four-day issue will conclude on Thursday (June 29).
The company's shares are commanding a healthy premium of Rs 490 in the unlisted market on Monday, indicating a strong demand for the public offer.
The leading drone manufacturer is offering its shares in the range of Rs 638-672 apiece, and at the upper end of the price band, it is planning to raise Rs 567 crore.
The Mumbai-based company has experienced a remarkable revenue growth compound annual growth rate (CAGR) of 237.48% between FY 2020 and 2022.
IdeaForge heavily relies on government-aided projects, which poses a significant risk due to its dependence on a single source of revenue.
The entry of other major players into the market, such as the Adani Group, through joint ventures with foreign drone companies, adds further competition.
Moreover, the analyst said that IdeaForge's lack of long-term contracts and reliance on established relationships for securing deals is a potential vulnerability.
The company is backed by Infosys, Qualcomm, Celesta, Florintree, EXIM Bank, Indusage Technology Venture Fund, and Infina Finance.
Back in December 2016, Infosys had announced an investment from its Innovation Fund in ideaForge. The tech giant owns 4.35% stake in ideaForge, according to the red herring prospectus.
Considering the upper limit of the issue's price band, Infosys' 1.62 lakh shares will likely be worth approximately Rs 110.15 crore.
The issue comprises fresh issuance of shares worth Rs 240 crore and an offer-for-sale (OFS) of 48.69 lakh equity shares by promoter and investors.
Under the OFS, Ashish Bhat will offload 1.58 lakh shares, Amarpreet Singh will sell 8,362 shares, and Nambirajan Seshadri will sell 22,600 shares.
Other selling shareholders include A&E Investment LLC, Agarwal Trademart Pvt Ltd, and Celesta Capital II Mauritius, among others.
The company will use the fresh issue money for debt repayment, working capital, product development and other purposes, while the OFS money will go to existing shareholders.
The bid size is 22 shares or its multiples, with a minimum investment of Rs 14,784 and a maximum of Rs 1,92,192 for retail investors.
IdeaForge has reserved 75% shares of the net offer for qualified institutional buyers, 15% for high networth individuals and the balance 10% for retail investors.
The offer also includes a reservation of 13,112 equity shares for company's employees who will get those shares at a discount of Rs 32 per share to the final issue price.
Ideaforge has raised Rs 254.88 crore from 31 anchor investors, which saw participation from several marquee investors such as Nomura, Invesco, HSBC and Nippon Life India among others.
The allotment of share will be finalised by July 4, while the equity shares will be transferred to demat accounts of eligible investors by July 6. The unsuccessful investors will get their refunds by July 5.
Ideaforge will make its grand debut on the bourses on July 7. JM Financial and IIFL Securities are the book running lead managers to the issue, while Link Intime India is the registrar.