Quality investors have backed Speciality IPO: Kotak

Retail investors generally go by market sentiment rather than fundamentals of a company, which is why Speciality Restaurants’ initial public offering (IPO) saw much better response from the institutional investors rather than the retail ones.

This is how V Jayshankar of Kotak Investment Banking defended the poor response of retail investors in the just-concluded Speciality Restaurants IPO, on CNBC Tv18. He said the IPO has got backing from quality investors who appreciate the fact that it is the only fine dining chain in the country which has reached such a scale and has huge potential to grow further.

He said when Speciality had launched the IPO, the Sensex was above 17,000. By the third day of the issue, the benchmark index had fallen below 16,000. And this poor sentiment affected the retail investors. But institutional investors understand the fundamentals of the company and the growth opportunity and it was expected that the QIB portion will be subscribed 4-5times. Speciality IPO’s QIB portion was finally subscribed at 4.68 times. The IPO was subscribed at 2.5 times at the end of day 3.

In reply to the allegation that the IPO was priced steeply which meant there was not much left on the table for investors to take on the listing day, Jayshakar said, valuations were not so steep for institutional investors. He added that the valuation was decided upon keeping in mind what would be attractive to investors. But due to poor market competition, retail investors might have found them expensive to invest in.