ICICI Prudential Life had a dismal listing on the exchanges with the stock price down 9.4% so far.
The IPO, one of the biggest after Coal India, saw strong demand from QIB and HNI segments with the QIB segment bidding almost 12 times and the HNI segment bidding 29 times the portion reserved for them. Rakesh Jhunjhunwala placed bids worth Rs. 750 crores.
So what gives after such strong bids being placed and the issue being oversubscribed 10 times?
Part of the reason could be the liquidity crunch at ICICI Bank. The mounting NPA load and the resulting crunch in tiered capital has strained its finances. The IPO has given it a chance to generate some liquidity.
The 1:8 bid-offer ratio would imply that the selling is by institutional investors. As Prudential didn't sell its stake in the IPO, it seems possible that ICICI Bank is offloading its shares. ICICI Bank wouldn't have been especially keen to sell its stake if it was not under real pressure to do so. The market seems to recognize this and ICICI Bank's shares are down 4.33%.
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