Street signs: IPO fatigue for retail investors?

Retail investors seem to be developing  fatigue for initial public offerings (IPOs), if one goes by the past few offers. The retail portion in the two big insurance IPOs — ICICI Lombard and SBI Life — was subscribed 1.22 times and 0.84 times, respectively. According to experts, many retail players who invest to make listing gains are not finding IPOs lucrative anymore, as companies are pricing the issues aggressively. “There isn’t much left on the table for investors anymore. So, many investors aren’t seeing a reason to invest. They can always buy in the secondary market if these stocks start doing well,” said a chief executive at a domestic brokerage. The grey market premium for these IPOs are also drying up fast.

Joydeep Ghosh

 
Small MFs get to play anchor role
 
The recent initial public offerings (IPOs) of insurance companies have seen the participation of quite a few small mutual fund (MF) houses as anchor investors. Canara Robeco MF, IIFL MF, Motilal Oswal MF and BNP Paribas MF participated in the Rs 5,700-crore ICICI Lombard offering as anchor investors. HSBC MF, Baroda Pioneer and IIFL MF invested in the Rs 8,400-crore SBI Life Insurance IPO. Until now, it was the larger funds that dominated anchor books, which is not surprising as companies prefer marquee names for anchors and investment bankers gravitate towards larger fund houses as their institutional divisions get a larger portion of revenue from servicing them. However, given the large size of the two insurance offerings, bankers could make room for smaller fund houses.

Ashley Coutinho

 
Caveat emptor: Beware of portfolio managers' games
 
Last year, a prominent portfolio manager tweeted that a small-cap stock had good potential and he was investing in it, which led to a surge in the stock price. However, during the year, the manager who held over one per cent in the company quietly exited the stock. The stock price, meanwhile, almost doubled and has been falling almost steadily since then. Market experts say that many of these so-called investment experts use this strategy to attract investors so they can exit their positions.

Joydeep Ghosh