Newgen IPO Gets Over 4 Times Subscription On The Last Day

Getting ahead of the industry analysts expectations, the Newgen IPO marked the close with 4.28 times subscription on the last day. As per data available on NSE, the IT company received bids for 5.23 Cr shares, against the total issue size of over 1.22 Cr scrips.

The Newgen IPO took a slow start on day 1 with only 18% subscription, however, gained pace on the second day with 70% subscription.

With this public offering, the IT company is attempting to raise $71 Mn by offering 13.4 Mn shares at an Issue price of $3.77 – $3.85 (INR 240-INR 245) per share.

As stated by Newgen Software MD Diwakar Nigam in a media statement earlier, “We are financially doing very well and registering good growth year-on-year. The IPO is mainly to provide exit or monetisation opportunity to some of our existing investors who have been with us for very long time. Around $14.8 Mn – $15.6 Mn (INR 95 Cr-INR 100 Cr) of the total fund will be used for setting up a new office in Noida.”

The remaining amount will be used for ‘General Corporate’ purposes.

The company also raised $20 Mn via anchor share allotment to nine institutional investors, a day prior to the opening of its IPO. With this IPO, Newgen venture capital investors including IDG Ventures, SAP Ventures, and Ascent Capital will also take an exit.

The company will get listed on both NSE and BSE.

Founded in 1992, Newgen Software is an IT company headquartered in New Delhi. It is a software products company offering a platform that enables organisations to rapidly develop powerful applications addressing their strategic business needs.

The firm currently sells its products across 60 countries. It basically provides services to the clients in sectors such as Banking, government/PSUs,  BPO/IT, insurance and healthcare verticals.

To be noted, the retail subscription in Newgen IPO is just 1.27 times, against the 11.14 times subscription of Qualified Institutional Buyers (QIB’s). Those who are a novice in the stock market space, QIBs are essentially the corporate investors who must be an institution, either domestic or foreign.

This indicates that Nextgen IPO gained a low popularity amid the common masses. The analysts also expect the IPO to have less listing gain and recommend to keep it for long term. However, the company has been successful in giving good returns to its investors, which as indicated by Diwakar the IPO was aimed at. Going ahead, how much the bidders will be able to gain on the listing day, will be interesting to watch.