Primary market losing appeal

Listing premium declines for latest IPOs

The phase of high retail and high net worth investor (HNI) interest in the primary market seems to have lapsed, considering the tepid response to the IPOs of UTI Asset Management Company and Angel Broking and the decline in their listing premium.

UTI AMC's IPO saw under-subscription of non-institutional investors' portion, comprising corporates and HNIs, at 93 per cent subscription while Angel Broking got even less demand from non-institutional investors at 69 per cent of shares on offer.

UTI AMC's shares listed below the issue price of Rs

554 and on Friday it closed

8.84 per cent below the issue price at Rs 505 against the all-time high it touched on the listing day at Rs 529.95.

Angel Broking shares also listed below the issue price of Rs 306 and never moved beyond Rs 296.70. It closed 20.09 per cent down from issue price at Rs

244.50 on Friday.

In most of the prior initial public offerings, the non-institutional category had received high subscriptions, as with Computer Age Management Services or Cams (111.85 times)-which is of similar size to the UTI AMC (Rs 2,160 crore versus Rs 2,242 crore of Cams) and having mutual fund industry as the main driving force--Mazagon Dock Shipbuilders (678.88 times), Happiest Minds

(351.46 times), Route Mobile (192.81 times) and Chemcon Speciality Chemicals (449.14 times).

The premium over the public issue price of other recently listed companies like Route Mobile (current market price Rs 707/all time high on listing Rs

988), Happiest Minds (Rs

325.90/Rs 394.95), Chemcon Speciality

Chemicals (Rs 402.20/ Rs

731.25) Cams (Rs 1,343/ Rs

1,489) are also coming down gradually.

Nirali Shah, senior research analyst, Samco Securities, said, "The IPO party seems to have been punctured with the comparatively muted listings of UTI AMC and Mazagon Dock. This response seems to be in tandem with the recent swing in market sentiments from bullish to neutral." `