The Rupees 2.6-trillion IPO frenzy

It has been a carnival for the initial public offering (IPO) market, with investors flocking to get a share of the pie in five big public issues that took place this week. A total of almost Rupees 2.6 trillion was locked in by investors, including anchor investors, for these issues that sought to raise a little over Rupees 7,300 crore, marking a frenzy of 36x subscription.

The year so far has seen 47 IPOs, raising over Rupees 40,000 crore.

All eyes were on the final day of its issue, with reports suggesting the stock was commanding a grey market premium of 81% over its upper price band of Rupees 500.

Ensuring some post-Diwali fireworks for Tata Sons, the company had garnered a subscription of 69.43x at the closing of the issue, making it the most subscribed offering of over Rupees 2,000 crore in size, surpassing that of HDFC Asset Management Company’s subscription of 60.44x in 2018.

Market players had earlier said that the strong financials, Tata brand name and a renewed vigour among investors bode well for IPOs. Bankers have said that while institutions have an investment surplus thanks to the heavy flow of SIP money coming in, HNIs are also betting big as IPOs leave the door open for listing day gains.

“We are seeing more good quality IPOs now that promise some value, which explains the high investor interest. Further, the markets have also recovered from the aftershocks of the Ukraine war and other geopolitical issues that had kept investors on the tenterhooks for long,” said a banker who did not wish to be named.

The qualified institutional buyers (QIB) portion saw a massive 203.41x booking. The HNI portion saw bids of 62.11x, while the retail basket was booked 16.5x. The portion reserved for shareholders and employees saw bids of 29.2x and 3.7x, respectively.

The Rupees 3,042.51-crore Tata Tech issue was a complete offer for sale of 61 million equity shares by both the promoter and selling investors. Shares are likely to to list on the bourses on December 5.

Among others, Gandhar Oil closed with a subscription of 64x, spurred by a 129x bid for the QIB portion, 62.23x HNI subscription and a 29x retail booking. Flair, too, closed with a 46.68x subscription, driven by strong QIB (115.6x), HNIs (33.37x) and retail (13x) bids.

IREDA had closed with a 38.8x subscription on Thursday, while Fedbank managed to turn the corner and closed with a subscription of 2.2x even as it was overshadowed by the encouraging numbers logged by its peers.