ITI Rallies 12% As It Withdraws Its Rs 1,400 Crore FPO

Shares of ITI Limited rose as much as 12.2 percent to Rs 94.55 after the company decided to withdraw its Rs 1,400 crore follow-on-public offer (FPO) citing "prevailing market conditions."

Despite two extensions to the FPO, the issue remained unsubscribed in the share sale period.

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BSE 260.454.7 (-1.80%)

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"The company has decided to withdraw the issue, due to the prevailing market conditions, in consultation with the Book Running Lead Managers to the Issue, being BOB Capital Markets, Karvy Investor Services and PNB Investment Services," in a statement to the exchanges.

The issue period for the FPO was first extended from 28 January to 31 January and then to 5 February. As of 4:45 pm on Wednesday, the issue was subscribed by 62 percent. The company had also reduced the price band to Rs 71-77 per share for its FPO from Rs 72-77 apiece.

ITI Ltd had made a fresh issue of 18 crore equity shares through the FPO to reduce the Government of India's stake in the company to below 75 percent, to conform with the minimum public shareholding norms for listed companies. Currently, the government holds 89.97 percent stake.

The company had intended to use the Rs 1,400 crore proceeds from the FPO to finance working capital (Rs 642.48 crore), repayment of high-cost loans (Rs 607.29 crore), and general corpus fund needs (around Rs 135 crore).