Indian airplane parts maker Aequs’ nearly $103 million IPO was fully subscribed within hours of opening on Wednesday, as investors were drawn to the company’s long-term prospects and expansion plans amid a growing backlog of jet orders.
The Airbus and Boeing supplier’s IPO got bids worth 6.73 billion rupees ($74.6 million), or 1.29 times the shares on offer, with demand led by retail investors that lapped up 5.3 times the shares reserved for them as of 12:09 p.m. IST.
The portion reserved for non-institutional investors was also fully subscribed.
Aequs is known for its supply of landing gear components used in a wide range of Airbus jets, including its best-selling A320 family, the twin-aisle A350 plane, as well as Boeing’s 737 MAX narrow-body aircraft.
The company’s aerospace business, which counts Airbus as its largest customer, forms nearly 90% of overall Aequs’ revenue, with the rest coming from consumer business that manufactures toys and consumer electronics parts.
The firm is a key beneficiary of planemakers expanding their sourcing of parts from India, and is betting that a growing backlog of jet orders bodes well for expanding its revenues.
The IPO, Aequs offered new shares worth 6.7 billion rupees with existing investors, including private equity firm Amicus Capital, offloading shares worth 2.52 billion rupees.
The shares were offered in a range of 118 rupees to 124 rupees apiece, leading to a valuation of 83.16 billion rupees at the upper end of the range.
Aequs raised 4.14 billion rupees from so-called anchor investors, including large domestic funds on Tuesday.
It plans to use some of the IPO proceeds for venturing into production of higher-value engine components. The shares will make their trading debut on December 10.
($1 = 90.2650 Indian rupees)
Reuters
