Karvy shock to rattle primary market

The ban on Karvy Registrar could cause a crisis in the primary market in the long term, merchant bankers said on Friday.

Karvy is the biggest share registrar agent in the country with more than 70 per cent market share. Other firms are significantly smaller in size and do not have the infrastructure to handle large public issues.

Since the Karvy group companies had acted in concert with the Karvy Depository Participant in the gamut of the IPO manipulations, the Sebi interim order passed yesterday had directed Karvy Stock Broking Ltd., Karvy Computershare Pvt. Ltd., Karvy Investor Services Ltd. and Karvy Consultants Ltd not to undertake fresh business as a registrar, excepting those businesses already contracted.

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Investment banks said MCS, which used to be the other big registrar agent, had not been too active after the ONGC allotment debacle. Some of the leading public offers expected to come this year includes Hutchison and GMR.

Other big ticket public offers include Air India and BSNL though these may not happen in a hurry.

While the ban on Karvy is opening up a lot of opportunities for smaller players to scale up and grab the business, 'replicating the people, processes, locations may not be easy and would involve time,' said another merchant banker.

Currently, there are smaller players like the Mumbai-based In-time which are slowly getting aggressive. MCS has also started doing some business after a long lull.