World’s biggest market for sub-$100 million IPOs booms in india

economictimes.indiatimes.com:

From finance startup Paytm to the nation’s largest insurer, investors have lost money from those IPOs in the past two years. They’ve turned to companies offering up to just $100 million in stock sales, as India hosted 92 such listings this year, the most in the world, according to data compiled by Bloomberg. Small firms are selling shares for their financing needs after interest rates surged, as they take advantage of a five-month market rally.

While such listings tend to be saddled with poor trading liquidity and have lax disclosure rules, retail investors are ignoring those concerns, bidding more than 100 times what’s on offer for some IPOs. “IPOs are a product of a bull run in stocks,” said Abhishek Sharma, managing director at GYR Capital Advisors. “Greater retail and institutional investor participation is providing tailwinds to these companies.” India’s major equity benchmarks have hit record levels, as earnings and the economy grow despite the highest interest rates since 2018.

The SME IPO index is outperforming, surging 26% this year compared to a 9% gain in the benchmark Nifty 50. Most offerings by small and medium-sized enterprises in recent months were oversubscribed. Dronemaker ideaForge Technology Ltd.’s IPO received 106 times more bids than sought, while mid-sized Utkarsh Small Finance Bank got bids as much as 102 times.

The SME IPO boom followed the dismal performance of insurer Life Insurance Corporation of India Ltd. and delivery startup Delhivery Ltd, the two biggest share sales of 2022. They are down about 33% and 18%, respectively, from their sale prices.

Payments application Paytm’s parent One 97 Communications Ltd. is also trading more than 60% below its offer price. “I am trying to add small