Few takers for govt offers,but private IPO party going strong

Have investors exited from the primary market? Not really. The IPO party is on,if the trends in the equity offerings from private companies are any indication. From NTPC,REC to NMDC,investors completely ignored the FPOs of public sector companies,forcing the government to seek institutional support to bail out these issues. However,in stark contrast,the response of all classes of investors,including retail,to the issues of private promoters has been excellent with three recent IPOs getting heavily oversubscribed and giving good returns to the investors after listing.

Take the cases of three private IPOs which were listed in March. Texmo Pipes IPOs retail portion was subscribed 7.11 times (or 711 per cent). The issue price of this company was Rs 90 but now the market price has gone up to Rs 143.45,indicating a return of 59.38 per cent to the investors. Man Infras public offer retail portion was subscribed 955 per cent (9.55 times) while its share price has gone up from Rs 252 to Rs 371.55,showing a gain of 47.44 per cent. ARSS Infras IPOs retail quota was oversubscribed 19.72 times while the total oversubscription level was 51.32 times. Its shares have jumped from Rs 450 to Rs 925.35,a gain of 105 per cent.

Compared with this,the performance of PSU offers was poor. The retail quota in NTPC issue was subscribed only 0.15 times,REC 0.22 times and the NMDC issue 0. 21 per cent (bids for only 2.52 crore shares came as against 11.56 crore shares on offer). Most analysts point out the government has been overpricing the PSU offers,leaving very little on the table for the investors.

Story continues below this ad

It has not been properly marketed in the retail sphere where the company has failed to deliver an in-depth understanding to the investors. I dont think the pricing is so high,but the main reason for the poor response could be the government’s attitude of behaving like a private promoter towards the investors who don’t feel like having the same kind of appetite for PSU offers, said K R Choksey Securities Ltd MD Deven Choksey.

On Monday,two more private sector IPOs closed with good investor response. IL&FS Transportation issue was subscribed 33.4 times with its retail quota getting sold 4.56 times. In the case of Pradip Overseas,retail quota was subscribed 10.52 times and a total subscription 14.08 times.