Retail investor back in the market, buying into IPOs
After the lull, the primary market is again back in action, with the retail investor at the centre .
Calendar year 2015 saw 21 initial public offerings (IPOs) raising ₹13,614 crore. This year so far, 16 IPOs have already hit the market and have raised ₹10,724 crore. Several more are lined up.
Apart from just one miss, all the 16 IPOs this year have seen the retail portion getting oversubscribed, according to PRIME Database, a Delhi-based firm that collects and analyses data.
The retail investor portion of the ₹1,200-crore RBL Bank IPO, which ended on Tuesday, was oversubscribed 5.58 times.
The IPO of Bangalore-based staffing solution provider Quess Corp, which concluded last month, saw the retail portion getting oversubscribed 32.8 times, the highest in the last six years. It was followed by Advanced Enzymes, with 11.12 times retail subscription.
The public issues of TeamLease Services and Thyrocare Technologies saw the retail portion getting oversubscribed 10.34 times and 8.3 times, respectively.
Recent buoyancy in the secondary market and regulatory changes in favour of retail investors helped in restoring investor confidence in the primary market, according to experts. For instance, in June 2015, Sebi made ASBA (applications supported by blocked amount) mandatory for retail investors. In ASBA, the application money is debited from the investor’s account only after the allotment of shares.
Also, the reduction in timeframe for the listing of IPOs has been reduced to six days from 12, leading to better retail participation since the money is not blocked for a longer time period.
Further, listing of these IPOs at a premium is also boosting investor confidence. In the last six months, nine out of 10 IPOs listed at a premium. The average listing day gains of these shares was 22.58%, against a 10.43% return by the Sensex in the same period. Quess Corp saw the highest listing day gain at 58.7%, followed by Thyrocare (38.6%).