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| Are retail investors turning upbeat on IPOs? |
| Press Trust of India / New Delhi Oct 13, 2009, 17:45 IST |
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In what could be viewed as a sign of revival of retail interest in the country's primary market, the initial public offering of Indiabulls Power has received over 31,000 applications from retail investors on the first day of its issue.
Although the retail portion of the offering remained undersubscribed, the interest was more than what was seen in three major IPOs of the fiscal — NHPC, Oil India and Adani Power.
According to an analysis, NHPC's over Rs 6,000 crore issue received 30,474 retail applications on the first day while Adani Power's Rs 3,610 crore issue got only 15,000 such applications. The Rs 4,982-crore issue of OIL received 7,700 applications.
"Retail investors are gradually staging a comeback and it is a pleasant surprise for the primary market," SMC Capital Equity Head Jagannadham Thunuguntla said.
The Rs 1,700-crore initial public offer of Indiabulls Power, which hit the market yesterday, got subscribed nearly six times, as institutional investors flooded the counter with maximum number of bids.
However, bids from retail investors on the first day of subscription accounted for only 37 per cent of the shares reserved for them.
The power arm of Indiabulls Realestate, which has LN Mittal as one of the shareholders, has reserved over 10.19 crore shares for retail investors of the total 39.07 crore shares on offer.
Marketmen said though this could be a sign of revival in retail investor participation, their response is still much lower than the 2007 levels.
"Most of the IPOs are aggressively priced leaving less for the investors on the table. Retailers are waiting for the share sale which would be in the affordable range and as the IPO comes from a credible group, retailers are putting in money," experts said.
Indian companies have mopped up over Rs 10,000 crore through the 13 IPOs so far this year. Though institutional and high-net worth investors showed huge interest in these IPOs, the retail investors have so far exercised caution.
In the Adani Power issue, retail investors subscribed for only six per cent of the shares reserved for them on the first day of the issue.
While the retail investors bade for only one per cent of the shares earmarked for them in NHPC issue and five per cent in the OIL IPO on the first day of subscriptions.
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