Nine IPOs launched from April 1, with a combined bid amount of high net worth individuals
, Was ₹ 15,900 crore. In comparison, in its IPO, the HNI category received bids worth ₹ 91,000 crore as opposed to the ₹ 803 crore shares allotted to them. In the ₹ 1,040 crore IPO of CE Info Systems, they have applied for ₹ 70,000 crore worth of shares, compared to the ₹ 166 crore offered in the HNI category.
Of the nine issues since April, the HNI component has not been fully subscribed to three issues, such as Paradip Phosphates, Dilliveri and Prudent Corporate Advisory.
The HNI component was subscribed 1-3 times on three other issues, such as Ethos, Life Insurance Corporation and Rainbow Children’s Medicare.
“We have noticed that HNI customers, who used to invest heavily, are not even bringing their own money to invest in IPOs. The gray market value for IPOs in this financial year is also not encouraging where HNIs can invest.” Chief of Products Subhajit Roy said,
. “We have seen many HNI customers stop financing due to increased margin requirements and low subscription volume.”
In 2021, HNIs have placed bids worth ₹ 100 crore to ₹ 500 crore in IPOs. They paid 5-10% to the finance companies for the loan, which was repaid immediately after enrollment. With the Reserve Bank of India limiting IPO financing to ₹ 1 crore per client from April 1, the window for large-scale borrowing and betting on IPOs has dried up.
Meanwhile, market regulator SEBI has reclassified HNIs into two categories from April 1. The first is those who bid between ₹ 2 million and ₹ 10 million for an IPO. The second is those who have invested more than ₹ 10 million. Demand for this specialty has grown significantly as a result of recent corporate scandals.
“A person who subscribes for ₹ 100 crore or bids shares worth ₹ 10 lakh will be allotted shares equally in the new system,” said Dharmesh Mehta, CEO, DAM Capital Advisors. “The disproportionate allocation in the HNI segment and the unavailability of data sharing in HNI subscriptions have discouraged them from participating in the IPO.”
IPO tracking market participants said that the price of private gray market for such problems depends on the demand, especially from HNIs. In the absence of aggressive bidding by HNI, gray market prices have remained, which has affected the overall subscription to the IPO.
The cost of IPO funds is derived from the amount HNI bids.
“Following the RBI’s rules on limiting IPO funds, the response of HNIs to such funds has declined significantly,” said Nitin Shanbhag, head of investment products.
Personal property. “While the main reason is the restriction on IPO funds, the other side is the geopolitical crisis, rising global inflation and the high volatility of the market due to the rise in interest rates of the central banks.”
Market participants said that in the post-IPO bull market, small private investors with a risk appetite could be the next big borrowers to invest in such issues.
“These wealthy clients will now invest up to কোটি 1 crore and apply for an IPO with a 50% margin of financing, where they will see more value proposals,” said Ray of IIFL Securities.