Anchor Lock in Ends, But Stocks Still Rally
In the last few months, there has been one thing that has concerned the IPO market. The anchor investors may have played an important role in building institutional demand for the IPO. However, it was noted that these anchor investors did rush for the exits as soon as the 30-day lock in period was completed. This created a lot of volatility in the stock around the completion of the lock-in period.
This trend was seen in most of the digital IPOs. In the case of stocks like Paytm, many of the anchor investors rushed for the exits due to the concerns around the stock listing. Paytm had fallen sharply on listing and the stock was down nearly 30% in no time. When the 1-month period was completed, anchor investors opted to book a loss and exit the stock.
This was not only true of a loss-making anchor investments like Paytm but also in the case of IPOs where the anchor investors were making a profit. For example, Zomato saw a sharp bout of selling once the 1 month anchor lock-in was completed. Even Nykaa, saw intense anchor selling pressure despite getting a solid subscription and also ensuring robust profits on listing. PB Fintech, the owner of Policybazaar was no different.
In cases like PB Fintech, the stock listed at a premium but post the 1-month anchor lock-in completion, the stock slipped into a rather steep discount. However, that trend appears to have changed in the recent past. For example, two recent IPOs saw the stock price hitting new highs just after the completion of the anchor lock-in period. This was true of Rakesh Jhunjhunwala backed Metro Brands and CE Info Systems, the owner of MapmyIndia.
Check - Rakesh Jhunjhunwala Portfolio
That means, the anchors had not rushed for the exits as soon as the anchor lock in period was completed. There are several factors to explains this shift. Firstly, unlike mega issues like Paytm, Zomato and Star Health, the issues of MapmyIndia and Metro were much smaller. Hence the anchor portion was also much smaller and that allowed these anchor investors the leeway to take the risk of holding longer. Both stocks touched new highs on 17-Jan.
There is one more interesting aspect. The anchor portion is shortly shifting from being a 1-month lock-in to a 3-month lock in as per new SEBI IPO norms. That does sound logical as it would prepare the investor to take a slightly longer term approach. Most of the anchor investors are testing waters and this will also help them formulate their internal policies on which IPOs to participate in as anchors and which IPOs to avoid. Hopefully, we should see more stable listing times.
In the heart of the bustling Indian stock market, a tale of triumph unfolded on November 30th, as Tata Technologies made an awe-inspiring debut. The curtains lifted at ₹1,200 apiece on the National Stock Exchange (NSE), casting a premium spell of 140% over the issue price of ₹500 per share. This stellar entry marked the grandest listing since November 2021, echoing through the financial corridors with waves of excitement.
- Dec 08, 2023Read More