Over $11 billion worth of pre-listing shareholder lock-ins for 53 companies are set to expire between July and September, potentially impacting the Indian stock market, though analysts anticipate a measured approach to selling by institutional investors.
Key Points
- Pre-listing shareholder lock-ins for 53 companies, totalling $11 billion, are scheduled to expire from July to September.
- The expiring lock-ins include one-month, three-month, and six-month periods for various companies.
- Promoters and promoter groups hold a significant portion of these shares, meaning not all will enter the secondary market.
- Analysts suggest that IPO lock-in expiries do not automatically cause a surge in secondary-market shares.
- Institutional investors and private equity funds often plan exits through negotiated placements or block trades, rather than direct open market sales.
A total of 53 companies are slated to have their pre-listing shareholder lock-ins lifted from July to September, according to an analysis by Nuvama Institutional Equities.
The value of the shares whose lock-ins are expiring is $11 billion.
However, not all of these shares will come to market, as the promoters and promoter groups also hold a sizeable portion.
Understanding Lock-in Expiries
For some shares, their one-month lock-in is expiring, and for some others, their three- or six-month lock-ins are coming to an end.
The stocks with a one-month lock-in expiring include the recently listed CMR Green Technologies, Turtlemint Fintech Solutions, Waterways Leisure Tourism, Hexagon Nutrition, Advit Jewels, and CSM Technologies.
The three-month lock-in of all these stocks will expire by September.
Apart from them, Om Power Transmission and OnEMI Technology Solutions are the companies whose three-month lock-in periods expire before the end of September. Bharat Coking Coal, Shadowfax Technologies, and Aye Finance are among the firms whose six-month lock-ins are set to expire.
Market Impact and Analyst Views
Analysts say IPO lock-in expiries do not automatically lead to a surge in secondary-market shares, as institutional investors and private equity funds typically plan their exits through negotiated placements or block trades rather than selling directly in the open market.
"More often than not, these transactions are arranged or typically placed.
"Brokers, merchant bankers and even the company help identify interested buyers... The impact depends on the stock's liquidity.
"If a large holder... has to sell in the open market, or if block deals happen at a discount, then it can weigh on the share price," said Ambareesh Baliga, independent equity analyst.
