Eight of the last 10 IPOs have seen little participation from high net worth individuals (HNIs). While Swiggy, Hyundai India, Niva Bupa Health and Godavari Biorefineries lacked applications for the HNI portion, four others barely managed single-digit applications. This is in sharp contrast to the previous 10 IPOs, which averaged 116 HNI subscriptions.
In Niva Bupa Health Insurance’s public issue, only 71% of the shares reserved for HNIs were underwritten, but the overall underwriting was 1.9 times. Swiggy’s Rs 11,327-crore IPO saw 41 per cent subscription for the HNI portion, even as the share sale saw bids at 3.59 times the offering amount. HNIs bid for the entire quota allotted to them in the Rs 2,900-crore ACME Solar Holdings offer (1.02 times), which was oversubscribed by 3.25 times for the retail portion and 3.72 times by institutional investors.
HNI interest in IPOs has declined significantly due to a cooling market, collapsing gray market premiums and rising funding costs, bankers said.
“Sebi’s research on IPOs reveals that most HNIs who applied for IPOs switched listings. Basically, the subscription level for IPOs is determined by the gray market premium,” Chief Nikhil said.・Mr. Ranka said. Investment officer and stockholder of Nuvama Asset Management. “As the market cools and gray market premiums collapse, interest in IPOs has waned significantly.”
The Sensex has fallen more than 11% since hitting its all-time high on September 27. Hyundai India’s Rs 27,870-crore IPO, India’s largest public offering, saw only 60% bids for the HNI portion, while Sagility India’s bid was only 1.93 times. “Regional and global concerns against the backdrop of an overall correction in the Indian stock market have led to softer demand from non-institutional investors in recent IPOs,” said Ranbir, co-head of investment banking.・Davda said. HSBC India. “This shift in sentiment was primarily driven by pressure on Indian corporate earnings in the second quarter, a spike in inflation in October coupled with geopolitical issues, volatility ahead of the US election, and Fed policy decisions. This is likely due to uncertainty surrounding the timing of the rate cut. ”
The 13 IPOs launched in September recorded an average of 180 HNI applications and the 10 IPOs launched in August recorded an average of 128 HNI applications. Manba Finance topped the list with 512 HNI subscriptions, followed by KRN Heat Exchanger and Gala Precision, both with over 400 subscriptions. Bajaj Housing Finance’s Rs 6,560-crore IPO also saw strong interest from HNIs, with 44 applications received in this category.
Investment banker Ravi Saldana said recent IPOs were priced aggressively due to market activity. However, adjustments in the secondary market and rising financing costs left little value for HNIs.
Bankers remain optimistic that HNIs will return to the secondary market once the volatility subsides. HSBC India’s Davda said: “With increased visibility and predictability around these issues and the market witnessing a few IPOs with a strong aftermarket, we expect non-institutional demand to return to health. It can be done,” he said.
