PKH Ventures Ltd withdrew its initial public offering (IPO) on Wednesday as it did not receive the requisite subscriptions from qualified institutional buyers (QIBs).
The IPO’s subscription period began on Friday, June 30, and ended on Tuesday, July 4. As per the Red Herring Prospectus (RHP), allocation to QIBs was 50% and the company received only 11% subscription from QIBs. The total subscription received on the last day was 65% of the offer size, which is less than the minimum 90% required for proceeding with allotment.
PKH Ventures IPO: Issue subscribed 65% on Day 3; check details
The company announced in a statement to the stock exchanges that it had decided to cancel the IPO in accordance with a board resolution adopted on July 4 after consulting with IDBI Capital Markets and Securities Ltd due lack of subscription from QIB.
As per the Draft Red Herring Prospectus (DRHP), the company’s promoter, Pravin Kumar Agarwal, offered to sell up to 98,31,461 shares as part of the IPO, in addition to a fresh offering of up to o 1,82,58,427 shares. Currently, 63.69% of the company is owned by Pravin Kumar Agarwal.
How can investors get their money back from the IPO?
In an IPO, applicants’ bank accounts are blocked with the required subscription amount for the amount requested. Depending on how many shares one has been allotted, the applicant’s account is debited for the exact amount needed for each share.
As an example, if you apply for shares worth ₹1.25 lakh and are granted shares at ₹95,000, the same amount would be deducted from your account, and the remaining ₹30,000 will be released.
In the event that the issue is undersubscribed or is withdrawn by the issuing company, the applicants will get a full refund of the amount blocked.
As per the RHP, the book running lead manager (BRLM), through the registrar to the offer, shall notify the Self-Certified Syndicate Bank (SCSBs) and the Sponsor Banks, in case of UPI Bidders using the UPI Mechanism, to unblock the bank accounts of the ASBA Bidders within one working day from the date of receipt of such notification.
IDBI Capital is the issue’s sole book running manager, and Link Intime India Private Limited is the Registrar to the offer.
Typically, the refund/unblocking process takes more time only when the issue is oversubscribed.
In this particular case, the issue would typically have been pulled due to a lack of subscriptions. Therefore, the number of applications may not be too much. Hence, unblocking should happen quickly.
As mentioned earlier, there is no physical refund of the excess amount. The physical reimbursement will only happen in extremely rare instances, such as when there is a dispute involving blocking and unblocking or other issues of a similar nature.
What happens if you don’t receive the refund?
Investors can get in touch with the merchant bankers and registrar via phone or letter if refunds are not received. Investors normally first get in touch with the bank, which then releases the funds, before getting in touch with the registrar.
Investors must be compensated if the unblocking takes longer than expected to complete.
PKH Ventures withdraws IPO amid tepid demand
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Updated: 05 Jul 2023, 07:06 PM IST