Investor Funds Temporarily Locked as Four IPOs Conclude in India

Over Rs 2.01 lakh crore of investor funds have been temporarily locked following the closure of four initial public offerings (IPOs) on Friday. An integral part of the Application Supported by Blocked Amount (ASBA) process, this temporary lock-up occurs as banks hold funds until share allotment becomes finalized. The four companies in question - Tata Technologies Ltd., Gandhar Oil Refinery Ltd., Flair Writing Industries Ltd., and Fedbank Financial Services Ltd. - attracted significant investor attention.

Breakdown of Subscriptions

Tata Technologies Ltd. led the charge with the highest subscription, drawing over Rs 1.56 lakh crore. It was followed by Gandhar Oil Refinery Ltd., which pulled in approximately Rs 23,000 crore, Flair Writing Industries Ltd. with Rs 20,000 crore, and Fedbank Financial Services Ltd. at Rs 1,720 crore. As of 7 p.m. on the final day of subscription, Tata Technologies' IPO stood oversubscribed by 69.43 times, with institutional investors showing the highest interest at 203.41 times.

Gandhar Oil's offering was subscribed 64.07 times, with institutional investors again leading the pack at 129 times. Flair Writing Industries' IPO saw a subscription rate of 46.68 times, with institutional investors subscribing a staggering 115.60 times. On a smaller scale, Fedbank Financial Services was subscribed 2.20 times, with institutional buyers showing the most interest at 3.51 times.

The ASBA Mechanism

The ASBA mechanism is designed to ensure that investors' funds are only debited for the number of shares they are allotted, with the remaining balance released after the conclusion of the process. This approach works as a safeguard, ensuring that investors do not lose out on their investment and that their funds are kept safe until share allotment is confirmed.

The Concern of Overvaluation

Founder of Treelife, Jitesh Agarwal, has expressed concerns about overvaluation in IPOs leading to unrealistic expectations and subsequent market corrections. He cited the cases of Paytm and Nykaa, where there were significant share price declines post-IPO, raising concerns about overvaluation. Agarwal stressed the importance of governance, financial transparency, and clear growth prospects for a successful transition.

Upcoming IPOs

In related news, Net Avenue Technologies is gearing up to launch its IPO with a price band of 16 to 18 per share, aiming to raise Rs 10.25 crores. The company, previously known as Net Avenue Inc, is engaged in the online digital direct-to-consumer business for Indian Ethnic wear and accessories.