Deepak Shenoy, the founder and CEO of Capitalmind, recently voiced his apprehensions regarding the staggering response to Bajaj Housing Finance's initial public offering (IPO). Shenoy found the situation to be particularly concerning, comparing it to a small two-showroom SME receiving bids amounting to Rs 4,000 crore. His main fear stemmed from the fact that when billions are locked in bank accounts due to IPO subscriptions, this pool of money becomes inaccessible for investing in case of a market downturn over just two days.
The IPO of Bajaj Housing Finance made history by becoming the first company to reach a bidding value exceeding Rs 3 lakh crore for an IPO worth Rs 6,560 crore during its initial share sale phase. The response from qualified institutional buyers (QIBs) was exceptional, with a subscription rate of 209.36 times during the final day of the bidding process. In contrast, the non-institutional investors (NIIs) subscribed 41.51 times, while the categories designated for shareholders and retail investors saw subscription rates of 17.52 times and 7.04 times, respectively. Additionally, the employee portion received bids 2.05 times its size.
Shenoy's reference to the SME IPO highlighted Resourceful Automobile's IPO, where bids worth Rs 4,800 crore were placed for an offering of just Rs 12 crore. He also mentioned Boss Packing Solutions, which had bids totaling Rs 1,073 crore for an issue size slightly above Rs 8 crore. These instances underscored Shenoy's point about the disproportionate response to smaller offerings compared to the massive bids received by Bajaj Housing Finance, signaling potential risks associated with such overwhelming investor enthusiasm.