IL&FS Investsmart Ltd lived up to its name yesterday (December 14) after closing a $90 million GDR (pre shoe) via Citigroup and CLSA.
The GDRs were priced at $4.28 per unit, which represented a 7.97% discount to yesterday's close. The discount seems large because the share price spurted yesterday and is equivalent to a narrower discount of 3.9% to the previous day's close.
One GDR equals one share.
The deal had to price in compliance with Sebi's new guidelines regarding minimum share price. The floor was thus set at Rs192. The issue price was equivalent to Rs197.
The 23.121 million GDRs being issued represent 53% of the existing share capital of IL&FS Investsmart. E*Trade picked up 7.5 million of the issue with the balance sold to approx 12 institutional investor across the three geographies.
ILFS Investsmart is a young company promoted by IL&FS (erstwhile Infrastructure Leasing and Financial Services) less than a decade ago in 1997. Its' primary business is intermediation of financial products and financial devices for retail, institutional and corporate investors.
US online broker E*Trade Financial Corporation made a strategic investment in IL&FS Investsmart through a Mauritius subsidiary in November 2004 along with Softbank Asia Infrastructure Fund, a JV between Japan's Softbank Corp and Cisco Systems. Jointly, the two acquired a 34% stake valuing IL&FS Investsmart at the time at $42 million.
IL&FS Investsmart IPOed earlier this year in July diluting thee equity base by 25%, after raising $35 million through the domestic offering. The issue received a strong response, with the Qualified Institutional Buyer portion closing 17 times oversubscribed 17 times and the retail portion more than 30 times over subscribed. The IPO was priced at Rs125 and went on to close its first day's trading at Rs184. It has consistently traded in this range for the last six months.
Proceeds of both the earlier domestic issue and the GDR are to be deployed towards expansion of the operations and branch network both in India and abroad.