IPO fever grips retail investors, HNIs

With the Bombay Stock Exchange (BSE) benchmark Sensex racing towards its all-time high, retail and high net worth individual (HNI) investors are flocking towards public issues.

The initial public offers (IPOs) of Career Point Infosystems, Eros International Media and Microsec Financial Services, all of which closed for subscription on Tuesday, received excellent response from both retail and HNI investors (see chart).

The IPO of Career Point, which provides training for competitive exams, was oversubscribed 31.74 times and 101.93 times in the retail and non-institutional investor (NII) categories, respectively. Retail investors can bid for shares up to Rs 1 lakh, while applications above Rs 1 lakh from HNIs go in the NII category.

Collectively, these three initial public offerings (IPOs) aimed to raise maximum Rs 612.5 crore from investors, but attracted bids worth Rs 6,533.38 crore.

"There is plenty of money looking for opportunities to invest," said Mayank Shah, chief executive officer, Anagram Capital. "Retail and HNI investors will only stay away from public issues if the pricing is aggressive," he added.

The confidence among retail and HNI investors was growing due to strong rally in the secondary market and good listing gains posted by recent issues on bourses, expert said. The Sensex, which crossed the 20,000-mark for the first time in more than 32 months on Tuesday, has gained nearly 11 per cent this month. At Wednesday's close of 19,941.72, the 30-stock index was just 1,265 points away from its all-time high of 21,206.77 hit on January 10, 2008.

The last eight public issues gave good returns to investors on the listing day. They even managed to sustain this performance. Shares of Gujarat Pipavav Port, Prakash Steelage, Bajaj Corp, SKS Microfinance, Engineers India, Midfield Industries, Hindustan Media Ventures and Technofab Engineering are trading well above their issue price currently.