On February 14, Indian IT exporter Hexaware Technologies' $1 billion initial public offering (IPO) saw full subscription in the final hours of the share sale. The strong interest primarily came from institutional buyers, with other investors holding back amid a broader market downturn.
Hexaware aims to achieve a valuation of 430 billion rupees ($4.96 billion) at the upper end of its price range of 674-708 rupees, marking India's largest IPO this year.
Major shareholder Carlyle is divesting approximately 21% of its stake in the company, with Hexaware not issuing any new shares in the offering.
The IPO launch coincides with a 3% decline in India's Nifty 50 index for the year and a 12.5% drop from its peak in September. This backdrop reflects concerns about corporate earnings, reduced U.S. rate cuts, sustained foreign divestment, and apprehensions over U.S. tariffs.
Narendra Solanki, research head at Anand Rathi, noted, "The market sentiment currently does not seem to favor high-priced IPOs."
The IPO was oversubscribed by 2.7 times, primarily driven by demand from institutional investors like foreign entities and mutual funds, bidding nine times the available shares. Nevertheless, retail investors only bid for a modest 11% of the allotted shares, with non-institutional investors bidding for a fifth of their allocation.
Arun Kejriwal, founder of Kejriwal Research, mentioned that investors seeking quick profits are wary of Hexaware due to the lack of a significant "listing pop" in the indicative gray market premium, which remains in the single digits.
Amid a lackluster year for IPOs, data from the stock exchange show that 60% of the companies listed on the BSE are trading below their IPO price this year.
Hexaware's shares are scheduled to start trading on February 19. Formerly a publicly traded entity until late 2020, Hexaware became a private company under the control of Baring Private Equity Asia (BPEA), with Carlyle acquiring a majority stake in 2021.
(1 USD = 86.7170 INR)