Deepak Korgaonkar / Mumbai Feb 04, 2010, 15:47 IST
Not only retail investors, but qualified institutional buyers (QIBs) too opted to stay away from the small and mid-sized initial public offers (IPO's), partially owing to the prevailing negative market sentiment. And also for the fact that small issues turn out to be illiquid counters.
Out of six IPO's that hit the market in last one week, except D B Realty (Rs 1,288 crore issue size), remaining five public issues hardly managed to get fully subscribed. These five companies proposed to collectively mobilise Rs 500 crore, at the higher side of price band.
Non-Institutional Investors (NII's) that includes corporate and individuals - other than retail individual investors, have saved the day for these issues and made them 100% successful. NII's portion in these public issues was oversubscribed by average six times to their offer size.
Company Name
Issue size*
Rs crore
Subscription
QIB
Retail
NII
D B Realty
1,288
4.47
0.37
4.25
Vascon Engineers
200
1.12
0.62
3.65
Aqua Logistics
169
0.26
3.00
5.07
Syncom Healthcare
56
0.99
6.25
16.60
Emmbi Polyarns
43
0.43
0.46
5.55
Thangamayil Jewellery
31
0.52
0.97
3.55
*On higher side of price band
QIB: Qualified Institutional Buyers,NII: Non-Institutional Investors Source:NSE
Small retail investors have ignored almost all public issues — even the high profile ones — as a result of low confidence and muted or no listing gains. The retail portion of D B Realty was subscribed just 0.37 times.
Retail investors are not even showing their interest in current follow-on-offer of NTPC. Their portion is subscribed by just 0.003 times, as they applied only for 452,872 shares out of 142.8 million shares reserved for them at the end of the first day of offer. The stock is currently trading at Rs 207, up 3% when compared to the floor price of Rs 201 per share.
QIB's portion in Thangamayil Jewellery, Aqua Logistics and Emmbi Polyarns was subscribed less than 0.60 times and in Syncom Healthcare it was subscribed 0.99 times. While the retail investor's portions in Vascon Engineering and D B Realty subscribed less than 0.65 times.
Aqua Logistics, despite IPO extension and reduced the price band managed oversubscription of just 1.94 times. QIB's portions subscribed remained at 0.26 times, while retail investors portions was subscribed 3 times after been given a discount of Rs 5 to the issue price.
Meanwhile in 2009, out of six IPO's in which QIP's portions remained under-subscribed, except Thinksoft Global Services and Jindal Cotex, the remaining four issues are currently trading 20%-60% below their issue price.
QIB's include foreign institutional investors (FIIs), domestic financial institutions (banks, financial institutions and insurance companies) and mutual funds.
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