Investor interest towards public issues continues to remain weak if the subscription figures for the over half a dozen initial public offerings (IPOs) in the past fortnight is anything to go by. Investors’ response for most share-sales, except for the R900 crore Muthoot Finance IPO, was lukewarm.
The first share sale in April that of gold loan financing company Muthoot Finance got tremendous response from investors and raised hopes of a revival in the primary market. The IPO market has been in a state of doldrums since February due to the volatility in the secondary market and heavy-selling from foreign institutional investors. Fund raising through IPOs for the January to March period this year had dropped 55% compared to the same period last year.
Investor response, especially institutional, to the remaining IPOs including Future Ventures and Innoventive Industries, was anything but the same as Muthoot. Kishore Biyani group?s Future Ventures India failed to attract investors and the issue just managed to scrape through witnessing just 1.52 times subscription.
The issue was under-subscribed in the institutional and retail category and was bailed out by HNI investors.
The fate of remaining IPOs launched during April was similar to that of Future Ventures: all of them were shrugged off by institutional investors, and retail participation remained tepid. The issues scraped through only because of high participation from HNIs.
?Investor appetite (for IPOs) is improving, it?s not as bad as it was earlier this year. But it also defers from case to case,? said V Jayshankar, executive director with Kotak Mahindra Capital, who handled both Muthoot Finance and Future Ventures IPOs
The poor response to the recent IPOs could prolong the wait for companies and investment bankers, some of whom are waiting to launch their share-sales since January.
Market experts say a much clearer signal about investor appetite will emerge from the over R5,000 crore Power Finance Corporation?s (PFC) follow-on offering. The state-run power sector lender is expected to launch its FPO in the second week of this month. The issue, part of the government?s R40,000 crore disinvestment programme, will be the first PSU share-sale in the current fiscal.