E-Paper
Anchor-led IPOs lack listing punch
Contrary to the expectation of Securities and Exchange Board of India (SEBI), public offers that attracted investment by anchor investors have been under-performing.
Contrary to the expectation of Securities and Exchange Board of India (SEBI), public offers that attracted investment by anchor investors have been under-performing. A combination of subdued IPO listings, wary retail investors and apparently greedy promoters looking for high valuations of their companies have led to an erosion of value of the stocks from these IPOs in the secondary market, say market players.
Anchor investors typically were expected to lend credibility and weight to IPOs.
Of 16 IPOs listed this year, five had got investment from anchor investors and have collectively lost 6.45 per cent of their stock value once they were listed – losing Rs. 390 crore between them, say analysts.
But the aggregate stock value of 11 IPOs that did not get anchor investment increased by 0.81 per cent or Rs 78 crore.
Looking at the bulk and assured subscriptions, some promoters seem to have discounted the need for retail investor participation. “Promoters believed that anchor investors would get them the needed subscription level and in this belief, seem to have overlooked the need to induce retail investor with value. They had priced the offers aggressively leaving
almost nothing on the table for retail investor,” said Jagannadham Thunuguntla, Equity Head, SMC Capitals.
Also, investments by anchor investors are perceived to be in companies that have long gestation periods before anticipated profits match up to prices.
The only IPO stock stock with anchor investor participation that gained on listing is Cox and Kings (India). The other IPOs that attracted anchor investors are Adani Power, Pipavav Shipyard, Indiabulls Power and DEN Networks.
