PSU IPOs should be only for retail investors: Prime Database

Taking a cue from state-run NHPC's disappointing debut on the bourses, primary market tracking firm Prime Database today said the government should consider giving shares to only retail investors in the initial public offers of PSU firms, to lower post-listing selling pressure.

"The PSU IPOs should be made only to the retail investors. An only retail policy will have a major positive impact: a very wide distribution reduces post-listing selling pressure; large sales by institutional investors often destabilize the prices," Prime Database CMD Prithvi Haldea said.

He added that by offering shares to the retail investors, the wealth created by state enterprises from domestic public resources shall be shared rightfully only with the public.

The IPO of NHPC was subscribed nearly 24 times on the final day, following which the government fixed the issue price at the higher end of the price band at Rs 36 a share.

However, the scrip failed to keep up the momentum and settled with just two per cent gains on the debut trade, which raised concerns about aggressive pricing of IPOs.

"Given the long-term prospects of this company, there should be no cause of concern for the investors, and the government should not get unduly worried about this, Haldea said.