According to one grey market dealer, TeamLease was fetching a premium of as much as Rs 240-250 per share on Monday before falling later. Photo: Hemant Mishra/Mint
Mumbai: The recent initial public offerings (IPOs) by staffing firm TeamLease Services Ltd and IT security solutions company Quick Heal Technologies Ltd are attracting high investor interest in the grey market.
That’s particularly of the TeamLease IPO that drew robust response before the initial share sale concluded on 4 February.
When the primary market picks up, the grey market starts buzzing with activity. High net-worth individuals (HNIs) are willing to pay a premium to buy shares in firms that are yet to list on exchanges.
The idea is to cash in on the strong gains seen on listing day.
According to one grey market dealer, TeamLease was fetching a premium of as much as Rs.240-250 per share on Monday before falling later; the premium on Quick Heal’s IPO, which opened on Monday, was in the range of Rs.60-70 per share before dropping.
TeamLease saw investors rush to subscribe to its IPO, leading to the issue being subscribed a little more than 66 times. The firm has priced the offering in a band of Rs.785-850 per equity share. At the upper end of the band, the firm will end up raising Rs.423 crore.
The allocation for institutional investors witnessed subscription close to 27 times, while retail investors and HNI investor categories were subscribed 10.6 and 185.2 times, respectively.
The employees’ category was subscribed 1.3 times the number of shares reserved.
As of 5pm on Monday, Quick Heal IPO was subscribed 0.15 times on its first day of subscription.
“TeamLease is seeing excellent response. The last time, we saw such huge response in the grey market was with Syngene,” said a dealer from Mumbai, who requested anonymity, referring to the offering by Biocon Ltd’s contract manufacturing unit that debuted in August.
Syngene International Ltd’s shares rose more than 24% on debut and are currently trading 59% higher from its issue price.
Another dealer from Mumbai said the premium dropped toRs.200-210 for TeamLease and Rs.40-50 for Quick Heal in Monday’s trading.
“Generally, it depends on how the subscription is going on. It changes as the market sentiment changes. It all depends on how much premium people expect at listing,” the second dealer said.
The grey market is usually driven by HNIs, who put in bids to subscribe to large chunks of an IPO, far in excess of the portion reserved for them. This pushes the overall subscription levels for the issue and, in turn, attracts investors to buy shares in the grey market at a premium.
The dealers said that the IPO of Precision Camshafts Ltd, the first IPO of calendar year 2016, had started with a premium of Rs.20 per share and rose to Rs.32-33 per share, but, a few days before listing, dropped to a discount of Rs.5-7 per share.
The Precision stock debuted 12.3% lower to its issue price on its listing day on Monday.
The issue was subscribed 1.89 times.
The auto component manufacturer opened its initial share sale on 27 January to raise Rs.400 crore from the primary market. The issue closed on 29 January.