Retail investors often miss out on SME IPO rally. Microcap fund managers decode why
SME IPOs and stocks have been drawing attention of investors and market on the back of significant growth, jaw-dropping returns and lucrative investment opportunities. Investors wish to diversify their portfolio and tap into the potential growth of SME businesses but noticeable trend suggest that they often miss the bus on the SME IPO rally. Kresha Gupta, Director at StepTrade Share Services said that retail investors have a limited portion in the SME IPOs because of their allocation structure.
"A number of quality SME IPOs, which are already minuscule in terms of issue size, leave a substantial portion reserved for institutional investors, leaving a relatively smaller room for individual participants," she said. Seconding her notion, she added at the over half of Winsol Engineers IPO was reserved for anchor investors, market makers, and QIBs, which left merely 47% issue for retail investors. Even of the remaining chunk, non-institutional high net worth investors took another 14.28% of the issue size, leaving retail investors with less than one-third of the issue size.
Another reason behind retail investors missing out the SME race is the heavy oversubscription of the SME IPOs, Gupta told LiveMint after launching the SME-focused Portfolio Management Services (PMS) in Ahmedabad last week. "These IPOs usually receive bids extraordinary subscriptions, somewhere around 100-1,000 times their issue size. Despite their eagerness to participate, retail investors get find extremely difficult for them to secure allotment.
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