Business
Primary market scenario post April 2022

The world has been affected by Covid-19 for over 24 months now. However, capital markets used this opportunity and had a fantastic run during the same whether it be secondary markets or for that matter primary markets. A striking feature of primary market offerings during calendar year 2021 was the fact that the bulk of the offerings, as much as roughly 80 per cent was offer for sale. This OFS was dominated by PE investors who took advantage of the markets and sold their stake at unbelievable valuations. This was also the period when tech platform companies and new age companies hit the market. As usual, the market had its fair share of successes and failures.
The driving force behind the listing gains was the oversubscription witnessed across companies barring a handful. This oversubscription came at a cost- the cost of funding the application and this got built into the listing price. This gave a feeling that the issue did well post listing. In reality, most of these companies have lost sharply from their highs and have given up a large part of their gains. Physical events of companies launching their roadshows had stopped and they had become digital with Zoom webinars being the way. This system had its advantages and disadvantages with time to complete being reduced to just one day. Further it gave an unfair advantage to merchant bankers and promoters as conferences were conducted behind an effective censor board in the form of a moderator and tough questions being simply avoided.
An interesting incident was in the Zomato digital event where the company made its entire presentation in US dollars forgetting the basic fact that in an Indian issue, the currency of subscription is Indian Rupees. Fortunately, no other such event has happened thereafter thankfully.
Let us move to April 2022. The scenario has changed completely. There are new regulations imposed by RBI and SEBI. RBI has introduced a ceiling on the amount of money that can be lent by an NBFC against application at an upper cap of Rs 1 crore. This means every HNI can borrow just one crore each. This would mean in simple terms that the HNI portion which has seen oversubscriptions of 200-600 times would just not happen. The method of controlling this lending would be the PAN card. The second thing would be that this oversubscription came at a cost. The cost of funding. When there is no leveraging, there is no cost of funding. This would have a dramatic impact on the unofficial but rampant grey market. Premiums there would crash and the obnoxious returns made on listing would simply vanish. This would put pressure on subscriptions from other categories as well. The day when an IPO for Rs 1,000 crore garnered subscription across categories of Rs 40,000-60,000 would just stop.
SEBI has split the HNI bucket of 15 per cent into two with the first bucket of 5 per cent for application between 2 lakhs to 10 lakhs. The remaining 10 per cent is for applications which are greater than Rs 10 lakhs. The allotment in these categories in case of oversubscription would be on basis of lots like retail. This implies that allotment would be uniform to all applicants of the base lot size which would be Rs 2 lakhs and 10 lakhs as the case maybe on basis of lottery. In case of undersubscription, allotment would be on normal basis where the applicant would get shares on the basis of his subscription.
The other major change is with respect to anchor allocation and lock-in. Half the shares allotted to anchors would be locked for 30 days while the balance half would be locked in for 90 days. This would make anchor investors seek comfort on the pricing of IPO’s and indirectly seek comfort that the issue is reasonably priced so that they do not go under during the mandatory lock-in period.
Let us look at the HNI bucket with an example. For assumption we take a size of the primary offering which could include fresh issue and offer for sale of Rs 1,000 crore. Fifty per cent of the issue would be for QIB’s, 15 per cent for HNI’s and the balance 35 per cent for retail. Of the 50 per cent for QIB’s, 60 per cent would be for anchors. In this example, Rs 300 crore would be for anchors with Rs 150 crore of shares being locked in for the customary 30 days and balance Rs 150 crore for the new period of 90 days. Any anchor would now take a view that his invested price or issue price should not go below the issue price in 90 days. This would give additional comfort to other investors hopefully.
HNI bucket of 5 per cent for Rs 2 lakhs to 10 lakhs would mean Rs 50 crore. This would require 2,500 applications of Rs 2 lakhs to be subscribed on lots. The larger bucket of 10 per cent or Rs 100 crore would require 1,000 applications of Rs 10 lakhs to be subscribed. When the allotment is capped at this system unlike the earlier proportionate, many large applications would be deterred until and unless on the last day just before closing time there is a feeling that the issue may not get subscribed in the HNI category. Then people would look at the issue and make larger applications than 10 lakhs.
In the new scheme of things there would be two major factors which would see a change. The first is subscription levels where three-digit subscription levels in HNI category would be a thing of the past. Second would be as far as premiums are concerned. They would fall significantly as there is no logical cost of interest which could decide the logical premium. The impact of these two factors combined should put pressure on pricing by merchant bankers and promoters.
As an analyst, a person like me would be very happy that management and merchant bankers would now have to justify valuations rather than take the easy way out of suggesting that there is a 50-60 per cent grey market premium. If you feel the price is high, sell in the grey market.
Interesting times ahead for primary markets which will learn to evolve with these changes as well.
National
J&K Assembly adjourned for three hours as BJP, NC legislators protest

Jammu, April 9: The Jammu and Kashmir Assembly witnessed pandemonium on Wednesday following which Speaker Abdul Rahim Rather adjourned the House for three hours.
Agitated over the rejection of an adjournment motion notice on unemployment moved by the BJP, party MLAs stormed into the well of the House.
On the other hand, the National Conference (NC) MLAs continued their protest on the Waqf Amendment Act, demanding a discussion.
The Speaker has already firmly ruled out allowing a discussion on the Waqf Amendment Act, holding that the matter is sub judice.
Chaos started as soon as the proceedings of the House commenced for the day, with NC MLAs standing up to insist the Speaker allow discussion on the Waqf law.
Simultaneously, the Speaker disallowed the BJP’s notice for an adjournment motion on unemployment, saying: “I have rejected the adjournment motion as it is not a matter of urgent nature”.
The Speaker’s announcement triggered protests from the BJP legislators, who accused the NC lawmakers of indulging in theatrics. “Yeh Dramabazi Bandh Karo (stop these theatrics)”, the BJP legislators shouted.
Amid protests, NC MLA Nazir Gurezi urged the Speaker to allow discussion on the Waqf law so that they could speak up against the injustice faced by Muslims.
“They want to divide Hindus and Muslims. They should tell people how many jobs they have provided to unemployed youth,” Nazir Gurezi shouted at the protesting BJP MLAs.
Amid protests, the BJP legislators stormed into the well of the House and staged a sit-in there.
The Speaker adjourned the House till 1 p.m.
The speaker has also disallowed a no-confidence motion against him, which the PC leader and MLA, Sajad Gani Lone had brought against him.
The J&K Assembly started its 40-day budget session on March 3 with a recess from March 26 to April 6.
National
Our lives will be better by following what PM Modi, gurus say: CM Rekha Gupta

New Delhi, April 9: Delhi Chief Minister Rekha Gupta on Wednesday hailed Prime Minister Narendra Modi’s speech at the Navkar Mahamantra Day event, saying that if one follows what he and spiritual gurus say, then “our lives will be better”.
Addressing the World Navkar Mahamantra Day, CM Gupta said, “We all heard what PM Modi said, and after him, there is nothing left to speak as he beautifully wove sentiments of all people in one thread. If we follow what PM Modi and our Gurus say, assimilating it in our lives will be our ‘bhakti (devotion)’.”
On the occasion, she also complimented the Jain International Trade Organisation (JITO) team for the excellent organisation of the event at 6,000 places across the world parallely and lakhs of people participating in it.
BJP National General Secretary and former MP Anil Jain congratulated the JITO team for the wonderful organisation of the Navkar Mahamantra event.
According to Jain, the event must have increased the enthusiasm in the people across the world and inspired the communities.
Notably, PM Modi, while addressing the event at Vigyan Bhawan in New Delhi, unveiled a set of nine powerful resolutions, ‘Nav Sankalps’, aimed at building a more sustainable, healthy, and prosperous future for the nation.
The nine pledges were saving water, planting ‘Ek ped Maa ke Naam’, dedicated to environmental conservation through afforestation, practicing cleanliness and hygiene as part of the ongoing Swachh Bharat Mission, adopting ‘Vocal for Local’ approach, ‘Desh Darshan’, natural farming, healthier lifestyles, embracing yoga and sports in their daily lives and helping the poor and supporting those in need.
The event, a global initiative, saw participation from people across more than 108 countries, aimed at promoting peace and universal harmony.
The occasion focused on the collective recitation of the revered Navkar Mahamantra, a central tenet of Jainism.
Highlighting the significance of the Navkar Mantra, PM Modi said: “It says believe in yourself. The enemy is not outside, it is inside us. Negative thinking, dishonesty, selfishness, these are the enemies and winning over them is the real victory…”
Navkar Mahamantra Divas precedes Mahavir Jayanti, which falls on April 10 this year.
The festival marks the birth anniversary of Lord Mahavir, the 24th Tirthankara of Jainism, who was born in 615 BC.
Crime
Pune woman death case: Aaditya Thackeray demands action against Dinanath Mangeshkar Hospital

Mumbai, April 8: Shiv Sena leader Aaditya Thackeray on Tuesday targeted the Chief Minister Devendra Fadnavis-led MahaYuti government over the death of a pregnant woman, Tanisha Bhise, in Dinanath Mangeshkar Hospital at Pune for alleged denial of treatment after demanding a deposit of Rs 10 lakh.
Aaditya has asked why the government is protecting trust and the hospital and not initiating action despite the inquiry committee citing non-compliance with the stipulated norms.
“Everybody is looking at whether Chief Minister Fadnavis will act against the trust and the agency running the Deenanath Mangeshkar Hospital in Pune that demanded 10 lakh rupees from the woman for delivery. Her inability to pay this ransom led to her demise,” said Aaditya in his post on ‘X’, a day after the consulting obstetrician and gynaecologist Dr Sushrut Ghaisas resigned.
He said that the internal committee denied the charge (of demanding a deposit of Rs 10 lakh by DR Ghaisas), while on Monday, a doctor admitted and resigned from the administration.
“How can Punekars trust such a hospital that speaks two different things to save itself and not the patient? If the hospital was demanding ransom money, what about the hospital’s tax and municipal dues? It’s in crores! Will the agencies go knocking on the doors of the trustees and agencies running this hospital?” he questioned.
Aaditya further asked, “Who is running this hospital and why is it so influential that the Chief Minister has to defend it?”
Dr Ghaisas, who, after a check-up of Tanisha Bhise on a case paper demanded a deposit of Rs 10 lakh, resigned on Monday, citing intense public anger, social media backlash, and threat calls as reasons.
Tanisha Bhise later died at another facility after giving birth to twin daughters.
Dr Dhananjay Kelkar, medical director of the hospital, told reporters: “In his resignation letter, Dr Ghaisas stated that he is under tremendous mental pressure due to public outrage, criticism and threats. He fears this will impact his ability to treat other patients and may also compromise the safety of his family. To avoid injustice to his work, he has decided to resign.”
He said that the hospital administration has forwarded the resignation to its trustees, and it is expected that it will be accepted, adding that Dr Ghaisas will complete his scheduled surgeries and work until Thursday.
Incidentally, the preliminary report prepared by the five-member inquiry committee chaired by Deputy Director Pune Circle Dr Radhakishan Pawar has blamed the hospital for the violation of provisions from the Hospitals Act by not giving primary treatment and later referring the case for further treatment.
The committee was established by the Public Health Department amid protests against the hospital.
According to the committee, the hospital has also violated the provisions of the Bombay Public Trust Act, 1950, which clearly mentions that in an emergency, the Charitable Hospitals must attend to the patient immediately and provide essential medical facilities for all life-saving emergency treatment and procedure, and toll stabilisation.
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