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India's Avenue Supermarts IPO oversubscribed 106 times

MUMBAI (Reuters) - The last day of bidding for an initial public offering (IPO) by India’s Avenue Supermarts Ltd saw investors clamouring for the shares, tempted by the company’s strong credentials and with a continued momentum from recent share offerings.

The IPO, which is seeking to raise up to 18.7 billion rupees ($281 million), saw bids for 106 times the number of shares available, the company said in a statement based on data available to it at 1900 local time (1330 GMT) on Friday.

The supermarket operator is selling shares in a range of 295-299 rupees each and its IPO is the country’s biggest since PNB Housing Finance Ltd raised 30 billion rupees in an initial share sale in October.

“The level of initial demand seen was always humongous right from the road show stage,” said Subhrajit Roy, head of equity capital market (ECM) origination at Kotak Investment Banking, one of the country’s top IPO advisers.

“This was a company with great financials, substantial scale, strong brand recall, good management credibility and it is way ahead of other companies in their entire peer group despite owning assets. So, it had a good appeal.”

The supermarket operates 118 stores across 45 cities under the “D-Mart” brand.

Strong demand was seen by institutional and retail buyers, Avenue Supermarkets said.

Earlier this week, the IPO of Music Broadcast Ltd, the operator of FM radio channel Radio City, was subscribed 39 times at close, showing continued demand at share sales after stock exchange BS saw a 51 times over-subscription in January.

India’s IPO market had its best year in six in 2016 with $4 billion worth of share sales, led by a $900 million issue in ICICI Prudential Life Insurance Co Ltd, the country’s biggest private sector life insurer.

The momentum is expected to continue this year, especially after the government’s plan to list $1.6 billion worth of stakes in state-run insurers.

“I would expect the momentum in IPOs to continue this year but it’s a myth that everything is getting sold. There will be demand seen but investors are going to be wise about what they buy,” Kotak’s Roy said.

($1 = 66.5775 Indian rupees)

Reporting by Swati Bhat; Editing by Elaine Hardcastle