Spice Comm IPO oversubscribed 25 times

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Qualified institutional investors are the main drivers to the Spice Communications public issue. The reserved portion of QIBs subscribed 41 times. Overall the issue has subscribed 24.7 times.

But the response from retail and non-institutional investors is too weak.

An initial public offering, IPO of 1,13,11,111 equity shares has closed for subscription, the company is looking to raise around Rs 523 crore in the upper end of the price band of Rs 41-46 per share.

A major portion of the issue proceeds would be used towards repayment of debt, payment of license fee for national (NLD) and international long distance (ILD) communication segments and payment to vendors for network equipments.

At least 60% of the net issue to the public shall be allotted on a proportionate basis to qualified institutional buyers (QIBs).

Further, 10% of the net issue shall be available for allocation on a proportionate basis to non-institutional bidders, while 30 per cent of the net issue to the public shall be available for allocation on a proportionate basis to retail bidders.

The equity shares are proposed to be listed on the Bombay Stock Exchange.

The issue will constitute 16.39% of the fully diluted post-issue equity share capital of the company. In March last year, Telekom Malaysia has picked up a 49% stake in Spice Communications Private Ltd for USD 178.85 million (Rs 733.28 crore).

Following the IPO, Telekom Malaysia's stake would come down to 39 per cent.

For the six months ended December 2006, the company had posted a net loss of Rs 41.81 crore on net revenues of Rs 394 crore.

Enam Financial Consultants and UBS Securities Pvt Ltd are book running lead managers to the issue.