SAMHI Hotels IPO subscribed 5.33 times at close

The ₹1,370.10 crore IPO of SAMHI Hotels Ltd, consisted of a combination of fresh issue and offer for sale. The fresh issue was to the tune of ₹1,200 crore while the offer for sale (OFS) was worth ₹170.10 crore. The IPO pricing was done in the band of ₹119 to ₹126 per share with the final price to be discovered through the process of book building. While the QIB portion picked up traction on the last day, the overall journey was quite slow. In fact, the retail, QIB and HNI / NII portion got full subscribed only on the last day of the IPO as did the overall IPO, obviously. At the close of the second day of the IPO, it had been just about subscribed 60% of the IPO size. The table below captures the day-wise progress in IPO subscription.

As can be seen from the above table, the overall IPO got 5.33 times subscribed at the close of the third and final day of the IPO on 18th September 2023.

Rapid update on the overall IPO response

The IPO saw fairly tepid response on Day-1 and Day-2 of the IPO and closed with relatively moderate subscription numbers at the close of Day-3. In fact, the company got fully subscribed only on the third and final day of the IPO, with the retail portion also getting fully subscribed only on the last day of the IPO. As per the combined bid details put out by the BSE at the close of Day-3, SAMHI Hotels Ltd IPO was subscribed 5.33X overall, with best demand coming from the QIB segment, followed by the HNI / NII segment and the retail segment in that order. In fact, the institutional segment saw some very good traction on the last day. The HNI portion did do well on the last day, but just about managed to get through with a one time subscription. Retail portion was relatively timid and got fully subscribed only on the last day of the IPO. Firstly, let us look at the details of overall allocation.

As of close of 18th September 2023, out of the 625.30 lakh shares on offer in the IPO, SAMHI Hotels Ltd saw bids for 3,330.06 lakh shares. This implies an overall subscription of 5.33X overall. The granular break-up of subscriptions was in favour of the QIB investors followed by the HNI / NII investors while the retail portion got the lowest subscription among the various categories. QIB bids and NII bids typically gather most of the momentum on the last day, and that was the case in this issue also in the case of QIB bids. While the QIB bids picked up momentum on the last day and added to its heft the HNI / NII portion just about managed to sail through. Here are the details of the category-wise subscription.

Subscription status of QIB Portion

On 13th September 2023, SAMHI Hotels Ltd completed the bidding for its anchor allocation. There was a strong and robust response as the anchor investors participated through the process of book building. A total of 4,89,32,143 shares were allotted to a total of 35 anchor investors. The allocation was done at the upper IPO price band of ₹126 (including premium of ₹125 per share) which resulted in an overall allocation of ₹616.55 crore. The anchors absorbed 45% of the total issue size of ₹1,370.10 crore. Listed below are the 10 anchor investors who got allotted more than 3% each of the anchor shares in the IPO of SAMHI Hotels Ltd. These 10 anchor investors listed below accounted for 63.93% of the total anchor allocation of SAMHI Hotels Ltd; setting  the tone for retail participation in the IPO.

Data Source: BSE Filings

The QIB portion (net of anchor allocation as explained above) had a quota of 339.44 lakh shares of which it has got bids for 2,993.39 lakh shares at the close of Day-3, implying a subscription ratio of 8.82X for QIBs at the close of Day-3. QIB bids typically get bunched on the last day and while the heavy demand for the anchor placement had given an indication of the institutional appetite for the SAMHI Hotels Ltd IPO subscription overall, the actual demand did turn to be moderately healthy for the IPO.

Subscription status of HNI / NII Portion

The HNI portion got subscribed just about 1.22X (getting applications for 209.94 lakh shares against the quota of 171.51 lakh shares). That is a relatively tepid 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 did not contribute much on the last day of the IPO. Unlike the QIB portion, the HNI / NII portion did not see good traction on the last day.

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 1.35X while the below ₹10 lakh bid category (S-HNIs) got subscribed 0.97X. This is just for information and is already part of the overall HNI bids explained in the previous para.

Subscription status of Retail Individuals

The retail portion was subscribed just 1.11X at the close of Day-3, showing relatively tepid appetite. It must be noted that retail allocation was just 10% in this IPO. For retail investors; out of the 114.34 lakh shares on offer, valid bids were received for 126.74 lakh shares, which included bids for 109.09 lakh shares at the cut-off price. The IPO is priced in the band of (₹119 to ₹126) per share and has closed for subscription as of the close of Monday, 18th September 2023.

Brief on the business model of SAMHI Hotels Ltd

SAMHI Hotels Ltd, is a branded hotel ownership and hotel property management platform operating out of India. It has a total portfolio comprising of over 4,801 keys across a total of 31 operating properties. Most of them are located in the key urban consumption centres of India. Its hotels are spread across Bengaluru, Hyderabad, Delhi-NCR, Pune, Chennai, and Ahmedabad. It is also currently developing 2 hotels with a combined capacity of 461 keys in Navi Mumbai and in Kolkata. The recent acquisition of Asiya Capital and ACIC SPV has given SAMHI Hotels Ltd access to an additional 962 keys across 6 operating hotels. It has its keys under well recognized hotels operators like Courtyard Marriott, Sheraton, Hyatt, and Holiday Inn, among others. This provides SAMHI Hotels Ltd access to the loyalty programs of these hotel chains and their online reservation systems. SAMHI Hotels Ltd counts Equity International (led by Sam Zell), GTI Capital and International Finance Corporation (IFC) among its key shareholders.

The 4,801 keys held by SAMHI Hotels Ltd are spread across several premium properties across major destinations. These include 170 keys at the Courtyard by Marriott in Bengaluru, 270 keys at Fairfield by Marriott, Bengaluru across Whitefield and ORR properties, 153 keys in Fairfield by Marriott, Chennai, 148 keys at Fairfield by Marriott in Rajajinagar Bengaluru, 123 keys at Four Points by Sheraton, Vizag, 130 keys at Fairfield by Marriott, Goa, 109 keys at Fairfield by Marriott, Pune, 126 keys at Fairfield by Marriott, Coimbatore, 130 keys at Holiday Inn Express, Ahmedabad, 170 keys at Holiday Inn Express, Hyderabad and 161 keys by Holiday Inn Express, Bengaluru. In addition, SAMHI Hotels Ltd also has substantial number of keys across Holiday Inn properties in Chennai, Gurugram, Nashik and Pune.

The funds would be largely used to repay / prepay loans taken by the subsidiaries of the company including accrued interest. The IPO will be lead managed by JM Financial and Kotak Mahindra Capital. KFIN Technologies (formerly Karvy Computershare is appointed the registrar to the IPO.