There was a lot of discussion and this was the largest IPO in the country. The company’s name is also huge. But “the bigger the IPO, the bigger the failure…”. In fact, if we look at the country’s five largest IPOs, they left investors breathless. The situation with these IPOs is like a “fancy store…bland dish.” Years later, investors still haven’t recovered from the shock of the listing day. This is no longer what happened in the last year or two. The country has seen thousands of IPOs over the past 15 years. But if we look back at the history of these five largest IPOs, we see that they deceived investors.
Whenever there is a large IPO in our country, there is a lot of discussion. But investors have to face reality on listing day and beyond. If we look back at history, the 5 largest IPOs in the past 15 years gave investors a huge shock. Hyundai Motor’s IPO has once again repeated history.
1. Hyundai Motor India IPO
In fact, Hyundai Motor India, the country’s largest IPO, hit the stock market on Tuesday. This is a large IPO and investors have high expectations. But investors were disappointed on the day of listing. Prior to this, the overall fate of the four major domestic IPOs was also similar.
Hyundai Motor India’s IPO was listed on the Bombay Stock Exchange at a loss of Rs 29 from the issue price. Its issue price is Rs 1,960. Its listing price on BSE was Rs 1,931, down 1.48%. The IPO issuance size is 278.7 billion rupees. As of the last trading day, the cumulative subscription for this IPO was 2.37 times. Despite the size of the IPO, it wasn’t that heavily subscribed. The retail portion is only 50% filled.
Why did Hyundai Motor’s IPO fail?
Market experts said the IPO valuation is quite expensive. In addition to this, all parts of the IPO are OFS, which means that all funds go into the promoter’s account. In this case, investors are not taking a risky bet.
2. LIC IPO
India’s largest insurance company, Life Insurance Corporation of India (LIC), launched its initial public offering (IPO) on May 17, 2022. LIC’s IPO received nearly three times subscriptions. In this way, the government sold its 3.5% stake in LIC, from which it received Rs 20,557 crore. This IPO also caused a lot of discussion. All brokers are predicting a strong listing. But it was also a failed show.
In fact, the IPO also disappointed investors on the day it went public. This IPO is also known as the largest IPO. Because the issuance size is 205.57 billion rupees. But the listing situation is lackluster. On the day of listing, LIC shares were listed on the BSE at 867.20 rupees, a discount of 81.80 rupees, a decrease of 8.62%. The price range for the IPO remains at Rs 902-949 per share. Domestic investors actively participated in this IPO. Because LIC has reached every corner of the country.
Despite the listing slump, the stock price fell into a downward trend, falling from the issue price of 949 rupees to 530.05 rupees within a year. Currently, even two years after listing, LIC shares are trading at around Rs 919.
3. Paytm IPO
One 97 Communications Limited, the parent company of Paytm, launched its IPO in November 2021. Before the launch of the IPO, the atmosphere was very warm. But investors were disappointed on the day it went public. Even if the listing fails, the crisis has not been resolved and the stock price continues to fall.
Some special things related to Paytm IPO:
Paytm IPO price is Rs 2,150 per share.
The issuance size of this IPO is 183 billion rupees.
Investors have shown strong interest in this IPO.
On the day of listing, the stock was listed at 1,950 rupees, a discount of 9%.
Since its listing, the stock price has fallen further and has not yet reached near the issue price. The price range of Paytm IPO was Rs 2,150 and the stock is currently trading at about Rs 750, which means the stock is about 60% lower than the issue price. Paytm’s share price fell below Rs 350 at one point.
Bloomberg published a report in November 2022. Paytm is said to have performed the worst among all the big IPOs in the past decade. At that time, Paytm’s share price fell by about 80% from the issue price. Earlier in 2012, Spain’s Bankia SA’s share price fell 82%.
Paytm History
Paytm founder Vijay Shekhar Sharma has said that Paytm chose the wrong bankers for its IPO, causing investors to suffer losses. Paytm was founded about 10 years ago. Initially the company was known as a mobile recharge platform, but during demonetization in 2016, Paytm payments services reached great heights under the leadership of CEO Vijay Shekhar Sharma.
4. Coal India IPO
Whenever big IPOs are talked about, Coal India comes up. Coal India’s initial public offering was in November 2010. At the time it was the largest IPO in the country. The company raised Rs 15,475 crore through the IPO. The IPO price is 245 rupees.
The IPO of this government-owned company received an enthusiastic response, with a total subscription of 15.28 times, and the listing momentum is also strong. This is the only IPO in the past 15 years and the largest one. But that didn’t disappoint investors. The listing premium reached 17.44%, but even so, there was still an increase. The current share price of Coal India is Rs 470.
5. Reliance Power IPO
Reliance Power’s initial public offering was in 2008. This also made history. Investors are excited about the IPO because the sponsors are the Ambani family. The IPO size is Rs 11,563 crore. During the recession (2008), Anil Ambani’s company received a strong response from investors.
Reliance Power’s IPO was subscribed at a staggering 73.04 times. The IPO was listed on February 11, 2008. The price range of this IPO is 450 rupees, and the listing price is 547.80 rupees, a premium of 21.73%. A few days later, the same thing happened with this IPO. A blockbuster IPO becomes a headache for investors. Investors protested as share prices fell. Currently, Anil Ambani’s company Reliance Power is in trouble, with its share price at just 40 rupees and a market capitalization of about 162 billion rupees. The stock is down about 82% from its highs.
In fact, the main reasons for the failure of all these large IPOs are – the IPO price is too high, OFS, and then the company’s business is in crisis. Regardless, now that investors have started to stay away from such IPOs, the latest example being the IPO of Hyundai Motor India, ordinary investors are shying away from investing, resulting in a fill rate of only 50% in the retail category. Experts say investors will lose interest in any such stock that opens below the price and then starts to fall.
What is an initial public offering?
The full form of IPO is an initial public offering. An IPO is when a private company sells its shares to the public for the first time, called an IPO. Through this process, the company enlists the help of the public in raising funds. With an IPO, the ownership of a company changes from private to public.
What is OFS?
OFS means Offer for Sale. In this way, promoters sell or reduce their stake in the company. Normally, when a company launches an IPO, existing promoters are given an opportunity to reduce or sell their stake through OFS. Many times, companies choose the OFS route to comply with minimum shareholding rules. Hence, promoters sell their stake in the company, promoter shareholding decreases and non-promoter shareholding increases.
