The Indian investment community has rushed to buy shares in Tata Consultancy Services’ initial public offering, with reports that it is already oversubscribed.
The Mumbai-based IT services provider placed 55.45 million shares on sale last Thursday (July 29) and set a price band of INR 775 to INR 900 ($16.81 to $19.53).
Reports claim that the shares were 1.6 times oversubscribed by the end of trading on Friday. The shares are being sold by a book-building process, whereby investors bid for shares within the price band, and the final price is arrived at through a weighted average of the winning bids. When the shares are oversubscribed, as is the case here, the final price is likely to be at the higher end of the band, especially as news of the oversubscription has (conveniently) been leaked while the book-building is still open (it closes on Thursday).
The IPO is expected to raise over $1bn, but this could increase by up to $161m as TCS has reserved the right to sell an extra 8.3 million shares if there is sufficient demand.
TCS, which has over 30,000 employees with clients including American Express, BT Group and Nokia, is India’s largest exporter of software and services, and has said that it aims to be in the global top 10 by 2010.