Institutional buyers, anchor investors star in IPO revival

Turbulent times

However, the twist in the IPO comeback story is that only one segment – Qualfied Institutional Buyers (QIBs) – hogged all the limelight.

A study brought out by SMC Capitals point out that the response from retail investors is muted to say the least, at the same time there was no meaningful participation from in-house segment of employees as well.  Response from HNI (high networth investors) segment is moderate, with not much of listing gain happened from the IPO market during the year.

Barring a few IPOs like Mahindra Holidays, Oil India and the latest Cox & Kings most of the IPOs could not generate any listing gains for HNIs.  Why listing gain alone, most of the scrips even now on bourses continue to hover below the issue price.
On an overall basis, the average QIB level subscription during the year was 11.42 times, the HNI level at 8.49x and the Retail level was 1.86x. The Employee subscription level was a mere 0.56x.

To put the things in right perspective, it may be noted that in several IPOs during this calendar year, the Retail and HNI portions didn’t even got subscribed fully. For instance, the IPOs of JSW Energy, Godrej Properties, MBL Infrastructure, DEN Networks and Raj Oil Mills couldn’t see the full subscription in their retail portions. Similarly, in case of JSW Energy and Godrej Properties, even the HNI category couldn’t get subscribed fully. This simply underlines the fact that there was no widespread participation in the IPO market revival of 2009.

Only the institutions have participated actively, both in QIB portion as well as Anchor Investors.  Despite their active participation, several of the IPOs in 2009 had poor listing indicating that institutions had tough time with their performance in IPOs of 2009, says Jagannadhan Thunuguntla, Equity Head, SMC Capitals.