For some time, we might see no IPOs in the market as the market regulator, Securities Exchange Board of India (SEBI) has put a temporary freeze on the initial public offering amid concern about the current bidding framework.
In the current framework, institutional and HNI’s are allowed to put in a bid, and they might get rejected later amid a lack of funds.
Associations of Investment bankers of India informed the market, that no IPO will be allowed till the issue is resolved by the market watchdog SEBI. This pause in IPO came in when some of the recent IPO’s funds of qualified institutional buyers came in either on the last day or on T+1 or t+2 day. And some cases were worse where applications got rejected amid lack of funds, funds were not blocked, this application falls under the category of “bidded but not banked”.
This kind of bid just increases the number of applications for subscription with no intention to subscribe and it reduces the chances of the genuine bidder getting the allotment of the IPO.
However, the upcoming IPO of Delhivery, Prudent Corporate Advisory will not be affected and there is no information yet about other upcoming IPOs like Paradeep Phosphates Limited which is due to open on 17th May.
The market will have to wait for any information for SEBI regarding the bidding framework.