The street is expecting MOIL (Manganese Ore India Ltd) to do an encore of Coal India when it lists on Wednesday. Going by the views of market experts, the shares of the company are expected to list at around Rs 550, a premium of 46% over the issue price of Rs 375. Coal India had listed at a 40% premium.
However, a majority of the investors in the MOIL offering are unlikely to benefit from it as only they have received a fraction of what they had applied for thanks to huge oversubscription.
As per Sebi regulations, IPO allotment should be done on a proportionate basis and retail applicants should get an allotment of not less than one lot.
The MOIL offering received about 12.98 lakh retail applications, about 30% of them applied for 527 shares (maximum allowed in the retail category). In the process, all retail investors were allotted 17 shares on a lottery basis irrespective of the number of shares applied for.
For instance, out of 51,072 investors, who put in an application of just one lot, 1,647 of them received an allotment of 17 shares and the application of the remaining 49,425 got rejected fully (didn’t receive a single share). And investors who put in an application of Rs 1.98 lakh for 527 shares also received 17 shares worth Rs 6,375.
This was not in case of Coal India IPO, in which all retail applicants received atleast some shares regardless of the application amount. This was possible as retail portion of Coal india IPO was subscribed only 2.31 times against 32.35 times for MOIL IPO.
?Ideally, shares are allotted on a proportionate basis. But it wouldn?t have been possible to allot every applicant 17 shares. Therefore, we had to resort to lottery-based system for allotment,? said Ganapathy Subramanian, vice-president, Karvy Computershare, the registrar to the Moil issue.
Retail interest towards all government offerings has been significant ever since the Coal India issue hit the markets. MOIL was the third consecutive issue to witness over 10 lakh retail application, after Coal India and Power Grid.