HNIs’ appetite for IPOs grows as most give handsome returns

Initial public offers are once again drawing the interest of high networth individuals (HNIs). At a time when the secondary market is very expensive and big returns are unlikely in short-term, HNIs are betting big on initial public offers (IPO). Moreover, real estate and gold are not looking attractive enough either.
According to an analysis, HNIs have definitely made a good choice for sure. A study of 51 IPOs that hit the capital market in the two years between July 1, 2015 and June 30, 2017 shows a majority of them are trading with handsome gains while only 11 have delivered negative returns, as on July 13.
As per data provided by corporate data firm Capitaline, 12 of them gave 100-259 per cent return. These are RBL Bank (142.87 per cent), Mahanagar Gas (136.32 per cent), PNB Housing Finance (101.99 per cent), CDSL (198.19 per cent), Shankara Building Products (135.38 per cent), Shree Pushkar Chemicals & Fertilisers (259.23 per cent), Dilip Buildcon (148.33 per cent), Avenue Supermart (205.89 per cent), Quess Corp (190.73 per cent), Manpasand Beverages (137.63 per cent), Infibeam Incorporation (160.39 per cent) and Bharat Wire Ropes (121.67 per cent).
Another set of 12 issues has given returns in the range of 50 to below 100 per cent.
They are Hudco (62.92 per cent), Alkem Laboratories (71.86 per cent), Teamlease Services (75.41 per cent), Syngene International (89.78 per cent), Sheela Foam (78.73 per cent), InterGlobe Aviation (66.90 per cent), SP Apparels (68.04 per cent), Equitas Holdings (54.45 per cent), Ujjivan Financial Services (66.88 per cent), Dr. Lal Path Labs (52.85 per cent), Endurance Technologies (90.38 per cent) and Thyrocare Technologies (63.59 per cent).
Karthik Srinivasan, senior vice-president and group head, financial sector ratings, ICRA, said, “Buoyed by favourable capital market outlook and healthy performance by some of the earlier issuances, there has been a surge in HNI interest in IPOs to capitalise on the listing gains.”
Pranav Haldea, managing director, Prime Database, said, “The primary market has seen a revival on the back of an extremely buoyant secondary market over the last couple of years. As long as the secondary market continues to remain stable/buoyant, we shall continue to see more and more companies, both from private and public sector, coming to the primary market for fund raising as also to provide exits to existing investors/shareholders.”
After a dry phase extending from 2012 to first half of 2014, the market towards the end of 2014 saw more and more companies filing papers with market regulator Securities and Exchange Board of India (Sebi) for initial offers. The definitive turnaround happened in the second half of 2015, with 21 IPOs hitting the market compared to 12 in 2012, 6 in 2013 and 8 in 2014. The momentum in the primary market got a further boost with 27 IPOs in 2016 and 13 so far in 2017. The latest IPO was that of AU Small Finance Bank, which received an overwhelming response from various categories of investors, with an overall subscription of 55 times. It got listed at an amazing 47 per cent premium.