IPO Frenzy: September To Be Busiest Month In 14 Years, Says RBI
Resource mobilisation through IPOs has remained robust so far this year, as India accounted for the highest number of public issues globally.
(Source: Unsplash)
The boom in India's primary market issue is attaining a new peak, as the Reserve Bank of India said September is set to be the busiest month for initial public offerings in both mainboard and SME segments in the last 14 years.
Financial markets are undergoing shifts and there is a surge of interest in small and medium enterprises IPOs, including from domestic mutual funds, with massive oversubscriptions, said the RBI's latest bulletin released on Friday.
"September is set to be the busiest month for IPOs—mainboard and SME—in 14 years, with over 28 companies entering the market so far," it said.
Resource mobilisation through IPOs has remained robust so far this year, as India accounted for the highest number of public issues globally, 27% by volume, in the first half of this year, led by public offerings of SMEs. In terms of the amount raised, India accounted for 9% of total proceeds raised through IPOs, the bulletin said.
It cited the example of the recently launched IPO of Bajaj Housing Finance Ltd. that garnered bids of over Rs 3 lakh crore.
The RBI said regulatory changes like the ceiling on IPO funding by NBFCs and the shift from a proportionality-based allotment method to a lottery-based allotment method have helped contain massive oversubscription rates seen earlier in mainboard IPOs.
"The persistence of the proportionality-based allotment method in the SME segment partly explains the massive oversubscription rates witnessed in public offerings of the SME segment in recent times," the bulletin said.
Market regulator SEBI is expected to release a consultation paper on the listing process of SME soon, Ashwani Bhatia, a whole-time member, said earlier this month, further raising concerns about the lack of checks and balances in the listing process.
The RBI also said the creation of UPI IPO mandates nearly tripled, with the rate of successful mandate execution reaching 100% in August, up from 98% in the same month last year.
