* India’s biggest bank IPO subscribed nearly 15 times
* Strong growth, margin attract investors despite rich valuations
* More than $2 bln of Indian IPOs lined up in March
By Devidutta Tripathy and Vishal Sridhar
MUMBAI, March 19 (Reuters) - Bandhan Bank Ltd’s initial public offering (IPO) to raise 44.73 billion rupees ($686 million) was subscribed nearly 15 times on Monday as the biggest market debut ever by an Indian bank drew strong interest, mainly from institutional investors.
Investors bid for about 1.22 billion shares, or 14.63 times the 83.5 million on offer during the three-day sale period that ended on Monday, stock exchange data at 1500 GMT showed.
Bandhan’s IPO is the biggest for the Indian market so far this year, after a record $11 billion in fund-raising from initial share sales in 2017.
Including the Bandhan share sale, companies have lined up $2.3 billion worth of IPOs in March alone.
Kolkata-based Bandhan, formerly a microfinance company specialising in small-value loans, was one of just two companies that won bank permits from the Reserve Bank of India in 2014, the first new bank licensing process in a decade.
Its low-cost distribution model, strong growth in past years, and a net interest margin of close to 10 percent that is the highest in the Indian banking industry, attracted investors.
Some analysts have, however, said rich valuations - the upper end of the IPO price range was more than five times the bank’s book value - could keep listing gains in check.
The shares are set to begin trading on or around March 27.
Relatively lower banking penetration in India’s rural areas, home to nearly 70 percent of the country’s 1.3 billion people, is positive for Bandhan’s banking model, which should also get a boost from more people putting their money in banks or financial products rather than saving cash or investing it in gold or real estate.
The portion reserved for institutional investors in the Bandhan IPO was subscribed 38.7 times, while retail investors bid for 1.2 times the shares reserved for them.
The bank and two of its shareholders - International Finance Corp and IFC FIG - were selling about a 10 percent stake in the IPO. Sixty-five anchor investors have already committed to buy shares worth 13.42 billion rupees as part of the IPO.
Axis Capital, Goldman Sachs, JM Financial, JPMorgan and Kotak Mahindra Capital are the banks managing the IPO.
A 42.3 billion-rupee IPO in state-run military aircraft maker Hindustan Aeronautics Ltd was subscribed about 45 percent by the second day of the sale. The IPO closes for subscriptions on Tuesday. ($1 = 65.1700 Indian rupees) (Reporting by Devidutta Tripathy and Vishal Sridhar; Additional reporting by Sankalp Phartiyal; Editing by Adrian Croft)