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Investor confidence in unlisted shares was shaken after recent developments that saw online drugstore PharmEasy issuing new shares in a rights issue at a 90 per cent discount to its previous valuations and Reliance Retail’s move to buy back and cancel shares held by public investors.
Both stocks were, at one time, very popular in the unlisted market, with canny investors cornering them with the objective of benefiting from their listing.
“Since investors have suffered losses on both counts, they will be careful when it comes to dealing in shares of unlisted companies,” observes a broker dealing in unlisted shares, adding that there will be some rationality to the pricing.
Big Brother is watching: No let-up in surveillance
Capital markets regulator Securities and Exchange Board of India (Sebi) and stock exchanges recently introduced an enhanced surveillance measure (ESM) for companies with a market capitalisation below Rs. 500 crore.
Companies under ESM have strict circuit filters of 2 per cent or 5 per cent and settle only on a trade-to-trade basis.
Several brokers and market participants say the measures have negatively impacted the shares of companies in this space.
Some have even written to the markets custodian, citing challenges such as liquidity drying up, retail participation declining, and out-of-sync stock price movements.
However, the watchdog has made it clear that there will be no reneging on the decision. Recently, Sebi whole-time member Ananth Narayan Gopalakrishnan said that the regulator had faced similar resistance in the aftermath of the implementation of the additional surveillance measure, but the action was crucial to preventing potential manipulation and safeguarding small investors.
Utkarsh SFB goes against the grain: GMP at 60%
The initial public offerings (IPOs) of some of the recent small finance banks (SFBs) have not done so well.
However, Utkarsh SFB looks set to buck the trend.
Shares of the Varanasi-headquartered SFB were seen changing hands at a more than 60 per cent premium to its IPO price band.
The lender’s Rs 500 crore maiden offering opens on Wednesday.
Market players say that robust demand for share sales at IKIO Lighting, ideaForge Technology, Cyient DLM (Design-Led Manufacturing), and Senco Gold has warmed investors towards IPOs.
In the IPO, Utkarsh SFB is looking to issue new shares worth Rs 500 crore at Rs 23–25 per share.
The company is a strong player in the microfinance segment, with rural and semi-urban areas being the mainstay of its operations.
