IPOs feel the heat, Cairn survives, Tanla, Pyramid not so lucky

MUMBAI: The 32.80-crore-share initial public offer (IPO) of oil and gas exploration major Cairn India was subscribed 1.3 times on the first day of the issue, according to the National Stock Exchange. A major chunk of the subscription has come from qualified institutional buyers, investment bankers involved with the offer said.

Meanwhile, the other two IPOs, which opened on Monday, were not as lucky as Cairn India. Tanla Solutions’ 1.42-crore-share was subscribed 0.70 times, while the 84-lakh Pyramid Saimira Theatre received bids for only 10,500 shares. The lack of investor interest for the two IPOs can also be attributed to the sharp correction in the market on Monday.

Brokers said a downturn in the market tends to affect the appetite for primary issues, especially among short-term investors. This is because if market is subdued at the time of the listing of IPOs, the rise in share price on the first day may be checked.

This hurts short-term investors who invest in these issues mainly through borrowed funds. Some time ago, the IPO of Deccan Aviation had received a lacklustre response from investors, mainly because the issue had opened at a time when the broad market was going through a correction phase. Dealers said the response to a public issue is also a function of the sector that the company belongs to.