Street signs: HNIs in the dock, Google threat for listings biz, and more

HNIs in the dock

High net-worth individuals’ (HNIs’) wager on the Mazagon Dock Shipbuilders IPO will pay off if the shares of the state-owned company more than double during the trading debut. After factoring in the huge oversubscription and the eight-day interest costs, the breakeven cost per share works out between Rs 290 and Rs 315 -- more than double the issue price of Rs 145. HNIs have placed bids worth nearly Rs 45,000 crore on the IPO. The HNI category of the shipbuilding firm’s IPO was subscribed 679x and overall subscription was 157x. “After making money in last three IPOs, HNIs have got very aggressive. It remains to be seen if their bets will pay off again,” said an analyst.

Sundar Sethuraman

Google threat for listings business

Tech giant Google has announced that starting this month it would make it free for retailers to list their products on its Shopping Tab for free. Analysts believe this could spell trouble for domestic local search and listing companies, such as Just Dial and IndiaMart. Until now, Google's Shopping Tab listings were paid, which pushed a lot of sellers towards the more economical domestic platforms. “Google’s announcement is a gamechanger. It could create headwinds for companies, such as Just Dial and IndiaMart. One has to keep a tab on how this development plays out,” said an analyst. Shares of IndiaMart have more than doubled this year, while those of Just Dial are down 30 per cent.

Sundar Sethuraman

PE opening on IPO roadblock

Private equity (PE) firms are eyeing stakes in companies IPO plans of which have got stalled. Last week, Warburg Pincus invested Rs 700 crore in Home First Finance, a housing finance company focused on the low- and middle-income segments. In November 2019, Home First Finance had filed its offer document with Sebi for a Rs 1,500-crore IPO. “Firms that have filed for offer documents in the past year are first trying to salvage their IPO plans. Many are finding it difficult and are tapping the doors of PE investors,” said an investment banker. There are about two dozen companies which have valid Sebi approvals but are unable to launch their IPOs because of change in dynamics triggered by the Covid-19 pandemic.

Samie Modak