PKH Ventures IPO subscribed just 0.65X at close

The ₹379 crore of PKH Ventures IPO, consisted of a fresh issue and an offer for sale for the said amount. The fresh issue portion was worth ₹270 crore while the OFS was worth ₹109 crore. The IPO saw tepid response on Day-1 and Day-2 of the IPO and closed with weak numbers at the close of Day-3. In fact, the company got fully subscribed on the first day of the IPO itself. As per the combined bid details put out by the BSE at the close of Day-3, PKH Ventures IPO was subscribed at just 0.65X overall, with best demand coming from the HNI / NII segment, followed by the retail segment in that order. In fact, the institutional QIB segment saw just about 11% subscription. The lack of institutional interest was already visible in the absence of any anchor placement of shares and post the IPO that lack of interest is also quite evident.

As of close of 04th July 2023, out of the 256.32 lakh shares on offer in the IPO, PKH Ventures Ltd saw bids for just 167.26 lakh shares. This implies an overall subscription of 0.65X. The granular break-up of subscriptions was in favour of the HNI / NII investors followed by the retail portion. The absolute lack of interest was seen in the QIB institutional portion of the IPO. In fact, the QIB bids and NII bids typically gather most of the momentum on the last day, but that was not the case this time around for both the segments.

PKH Ventures Ltd IPO Subscription Day-3

QIB Portion

There was no anchor allocation in the IPO of PKH Ventures Ltd and hence there was no anchor portion reserved and carved out of the QIB portion. The entire QIB portion was made available as part of the IPO to investors. The QIB portion (net of anchor allocation if any) has a quota of 128.16 lakh shares of which it has got bids for just 14.04 lakh shares at the close of Day-3, implying a subscription ratio of just 0.65X for QIBs at the close of Day-3. QIB bids typically get bunched on the last day and in the absence of the anchor placement that was not possible to gauge. In this case, the actual demand turned out to be quite tepid.

HNI / NII Portion

The HNI portion got subscribed 1.67X (getting applications for 64.17 lakh shares against the quota of 38.45 lakh shares). That is a rather tepid but steady response at the close of Day-3 largely because this segment normally sees the maximum response bunched on the last day. Bulk of the funded applications and corporate applications, come in on the last day of the IPO, and that was not exactly visible as the overall HNI / NII portion just about added to its numbers on the last day. However, the HNI portion did eventually manage to sail through.

Now the NII/HNI portion is reported in two parts viz. bids below ₹10 lakhs (S-HNI) and bids above ₹10 lakhs (B-HNI). The bids above the ₹10 lakh category (B-HNIs) typically represents most of the major funding customers. If you break up the HNI portion, the above ₹10 lakh bid category got subscribed 2.01X while the below ₹10 lakh bid category (S-HNIs) got subscribed 0.98X. This is just for information and is already part of the overall HNI bids explained in the previous para.

Retail Individuals

The retail portion was subscribed just 0.99X at the close of Day-3, showing weak retail appetite. It must be noted that retail allocation is 35% in this IPO. For retail investors; out of the 89.71 lakh shares on offer, valid bids were received for only 89.05 lakh shares, which included bids for 65.35 lakh shares at the cut-off price. The IPO is priced in the band of (₹140-₹148) and has closed for subscription as of the close of Tuesday, 04th July 2023.

Here is a quick background about PKH Ventures Ltd. It has a 23 years pedigree in the construction and hospitality business in India. The company was incorporated 2000  and is engaged in the business of Construction & Development, Hospitality, and Management Services. Broadly, its two major verticals are the construction vertical and the second is the hospitality and facilities management vertical. PKH Ventures Ltd executes civil construction works on behalf of third party real estate development projects in India. The civil construction business of the group is carried on under the banner of its subsidiary and construction arm, Garuda Construction, which basically undertakes such third party construction projects. A recent marquee projects was the development of the Delhi Police Headquarters in April 2021, entailing the construction of two towers of 17 storeys each, with a complete glass façade combined with a steel bridge connecting the two towers.

PKH Ventures plans to develop its own projects also at a future date and these would include real estate development at Amritsar, food park at Jalore in Rajasthan, cold storage facility at Indore and a wellness centre at Chiplun in Maharashtra. Let us turn to the hospitality and facilities management vertical, which is carried on under the banner of PKH Ventures Hospitality. This arm of the company owns, manages, and operates hotels, restaurants, QSRs and even health spas on outsourced basis. In addition, the company also provides services like mechanical, electrical, and plumbing works; apart from annual maintenance contracts to offer a complete a 360 degree solution. PKH Ventures has also developed two hotels in Mumbai; Golden Chariot Hotel & Spa, Vasai and Golden Chariot, The Boutique Hotel near Mumbai International Airport.