Mumbai, May 23: Deccan Aviation ? the promoters of low-cost carrier Air Deccan ? today rewrote capital market history by lowering the price band of its initial public offering hours after its issue closed with a very weak response.

The IPO has been extended by three days till May 26.

The IPO, which opened for subscription through the book building process on May 18 in a price band of Rs 150 to 175 per share, was scheduled to close today.

However, with investors adopting a cautious approach to new issues in the wake of a savage market correction over the past three trading sessions, Deccan Aviation scaled back the price band to Rs 146 to Rs 175 per share. Deccan’s IPO had hit an air pocket with only 30 per cent of the issue being subscribed till late afternoon. At this juncture, it seemed that lead managers to the issue ? ICICI Securities and Enam Financial Consultants ? would be forced to lift the unsold shares, thus giving the IPO the dubious distinction of being the first undersubscribed flotation in recent times.

However, lead managers to the issue heaved a sigh of relief in late evening when figures from both the exchanges showed that the IPO was subscribed fully. As against the total issue size of 2.45 crore shares, the bids received for the issue were 2.59 crore.

Most of the interest came from foreign institutional investors (FIIs) who bid for over 90 lakh shares against 1.22 crore shares reserved for this category. Retail investors on the other hand bid for more than 19 lakh shares. But banks, mutual funds, FIs and insurance companies did not bid for even a single share.

Sources connected with the IPO later told the The Telegraph that the date was extended to give more opportunity to investors. As the date was extended, the price band had to be brought down in tune with Sebi guidelines. They indicated that the lukewarm response to the issue was the result of the massive market correction.

There has also been a lukewarm response to issues of three other companies: Unity Infraprojects, Gangotri Textiles and Rathi Udyog.

The IPO of Unity Infraprojects, scheduled to close on May 24, has been subscribed only one time. Rathi Udyog’s issue, which will close on May 25, has seen only 32 per cent subscription, while Gangotri Textiles, whose IPO closed today, also saw the issue being subscribed by only one time.

However, few observers have another story to tell about the response to the issue of Deccan Aviation. They aver that capital markets have been wary of aviation stocks due to rising fuel costs. A case in point is that of Jet Airways. The share price of the leading private airline, which fixed the issue price for its IPO at Rs 1,100 last year, is now ruling at Rs 753.15, a discount of 31 per cent to the cut-off price.

Sources were optimistic that there would a good response to the IPO over the next couple of days as the secondary markets had now shown signs of a smart recovery.