Samhi Hotels IPO Sees Muted Response on Day 1

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The initial public offering (IPO) of Samhi Hotels received a tepid response from investors on the first day of bidding, September 14. The offer has received bids for 26.73 lakh shares against the issue size of 6.25 crore shares, resulting in a subscription of 4%.

Retail investors have provided the most support to the issue, bidding for 21% of the reserved portion, which is 10% of the total offer size. High net-worth individuals (HNIs) have subscribed for 1% of their portion, which is 15% of the offer. The portion set aside for qualified institutional buyers (QIBs), which is 75%, was subscribed 0.005%.

The tepid response to the IPO is likely due to a number of factors, including the high debt levels of the company and its losses in the past few years. Samhi Hotels has not turned into profit yet, as per the financials reported in the prospectus, though managed to narrow losses year after year.

The company is planning to raise Rs 1,370.1 crore via the public issue at the upper price band. The price band for the offer, which closes on September 18, has been set at Rs 119-126 per share.

The public issue comprises a fresh issuance of shares worth Rs 1,200 crore, and an offer-for-sale of 1.35 crore shares worth Rs 170.1 crore by three investors.

Privately-held Samhi Hotels will make use of the fresh issue proceeds for repaying debts amounting to Rs 900 crore. It reported outstanding debts of Rs 2,812.5 crore on a consolidated basis including Rs 142.9 crore of FCCDs as of June 2023.

The company has raised Rs 616.54 crore via several anchor investors on September 13, including the Government of Singapore, Monetary Authority of Singapore, CLSA Global Markets, HSBC Global, Citigroup, Societe Generale, SBI Mutual Fund, ICICI Prudential, and Elara India Opportunities Fund.

The success of the IPO will depend on a number of factors, including the overall market sentiment and the appetite for hotel stocks. However, the company’s strong operating numbers and topline performance may be able to attract investors, despite the high debt levels and losses in the past few years.


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