MANDATE CREATION VIA UPI DROPS 24% IN AUG
But mandate execution sees marked improvement
Mandate creation through the Unified Payments Interface (UPI) for initial public offerings (IPO) dipped in August, despite it being the best month in terms of mobilisation in nearly four years. August saw eight IPOS cumulatively raise ~17,841 crore, the most since November 2017. In the month, 5.86 million IPO mandates were created through UPI.
Mandate creation through the Unified Payments Interface (UPI) for initial public offerings (IPO) dipped in August despite it being the best month in terms of mobilisation in nearly four years.
August saw eight IPOS cumulatively raise ~17,841 crore, the most since November 2017. In the month, 5.86 million IPO mandates were created through UPI, according to data released by the National Payments Corporation of India (NPCI), the umbrella entity for retail payments in India.
In July, a record 7.66 million mandate creation requests were received by banks on the back of the blockbuster IPO of food delivery firm Zomato. The IPOS of GR Infraprojects, Clean Science and Technology, and Tatva Chintan were also very successful.
In comparison, the response to IPOS was lukewarm in August, resulting in a 24 per cent month-onmonth (MOM) drop in mandate creation through UPI.
Mandate creation is the process of blocking an amount in the customer’s bank account for an IPO application.
Although mandate creation requests dipped in August, mandates executed —transactions in which investors were allotted shares — saw a sharp rise. In August, more than 1.32 million mandates, or over 22 per cent of those created, were executed. In July, only 532,943, or less than 7 per cent, of the mandates created were executed.
In August, the country’s largest lender, State Bank of India (SBI), received the highest number of requests at 1.46 million, followed by HDFC Bank with 1 million, ICICI Bank with 711,593 requests, and Bank of Baroda (BOB) with 484,685 requests.
These top four banks in terms of requests executed 841,739 mandates, which constituted 63.37 per cent of total mandates executed in August.
Also, there was a substantial improvement in the rate of decline of UPI IPO mandates at banks. SBI saw an approval rate of 88.32 per cent. Other public sector banks (PSBS) like BOB, Bank of India, Punjab National Bank, Canara Bank, and Central Bank reported approval rates of 93.99 per cent, 90.71 per cent, 93.51 per cent, 86.60 per cent, 93.83 per cent, respectively. This was almost similar to, if not better than private sector banks.
In terms of amount mobilised, August was a good month for the primary markets, but the investor frenzy ebbed.
Online platform Cartrade and cement manufacturer Nuvoco Vista launched IPOS of ~5,000 crore each. In the preceding month, six companies had mopped up ~14,629 crore, with Zomato raising ~9,375 crore. According to investment bankers, the pipeline for the rest of the year looks strong. Aditya Birla MF and Go Airlines are expected to launch their offerings in the near term, while Paytm, Policybazaar, and Nykaa could tap the market during the latter part of the year.