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Equitas Small Finance Bank IPO: Grey market cold to Equitas SFB on lack of HNI interest, cloud over financials


New Delhi: The stock of Equitas Small Finance Bank (ESFB) is reflecting absolute disinterest among investors in the grey market, the unofficial market for trading in unlisted shares.

The primary market showed tepid response to the Rs 517.6 crore issue, when it was open for subscription from October 20 till October 22. Compared with blockbuster response to earlier issues, the issue received muted response from investors and was subscribed just two times, with bids for 22.57 crore equity shares against the offer size of 11.58 crore.

The qualified institutional investors segment was subscribed 3.9 times, the retail investors category 2.08 times and the non-institutional quota 22 per cent.

The issue sailed thanks mainly to last-minute interest from qualified institutions and retail investors. The stock is likely to be listed on November 2.

In the grey market, investors are largely staying away from the scrip, which has caused the share premium to vanish as soon as the IPO closed for subscription. As of Friday, grey market premium on the stock was almost negligible to negative between zero and minus Rs 2.

Dealers active in the grey market said the stock has lost sheen due to various reasons.

Sunil Chandak of Mumbai based Gennext Investrade said the HNI portion of the issue received a tepid response. Also, the overall response to the issue was poor.

“The issue lost sheen because of lacklustre bidding from rich investors,” he said. Usually, HNIs borrow money from NBFCs and rush to the grey market to pick up the shares, causing the stock premium to surge.

Issues of Mindspace REIT, Happiest Minds, Route Mobile, CAMS, Chemcon Speciality, Angel Broking, UTI AMC, Mazagon Dock and Likhitha Infrastructure grossed Rs 11,630 from primary market since July 27.

Chandak said recent IPOs from the financials space have failed to cheer the market. The issues of Angel Broking and UTI AMC got listed at a discount. However, CAMS was an exception.

Even the issues seeing solid listing pops have been unable to hold ground, as investors have booked profits immediately. Recent winners such as Happiest Minds, Route Mobile and Chemcon Speciality have retreated sharply from their peak levels

Analysts say the Equitas SFB stock does not have much to offer to investors. Plus, the market has been generally worried about the financial services sector of late.

“Currently, shares of top banking and financial companies are available at good valuations. There is not much on the table for investors,” said Abhay Doshi, a Gujarat-based independent dealer of unlisted shares.

He said Equitas SFB’s promoter entity, Equitas Holdings, has to lower its stake in the bank to 40 per cent within the next 12 months. “Investors will evaluate the performance of the stock and take a call post listing,” he said.


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