Mu­n­ish Ag­gar­wal

Di­rec­tor–cap­i­tal­mar­kets, Equirus Cap­i­tal

Dalal Street Investment Journal - - COVER STORY -

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.

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