Director–capitalmarkets, Equirus Capital
IPO financing as a product is an interplay between the investor’s expectation of post-issue performance, over-subscription levels and cost of such borrowings. The investor pays for the funds borrowed for the 8-10 day period and expects that the gains on shares allocated to him in the IPO will be higher than such interest. Depending on allotment to the investor and listing gains, the investor either makes money or loses money. There have been instances where, despite strong listing gains, the allotment was so small that investors who had invested through IPO financing lost money. We expect investors' interest in IPOS to remain high, which will drive oversubscriptions and thus the demand for IPO financing to maximize allocations. From supply perspective, there has been a revival in the product, both in terms of NBFCS offering the facility as well as the cost of funds.