The primary markets are abuzz with activity as investors across categories are trying hard to grab a share of CSB Bank Ltd and Ujjivan Small Finance Bank by subscribing to their respective initial public offerings (IPOs).
According to a report, domestic institutions have issued short-term commercial papers (CPs) worth over Rs 32,500 crore to fund these two IPOs.
An Economic Times report said that IIFL, Infina Finance, Aditya Birla Finance, JM Financial and Sharekhan BNP Paribas are among the institutions that have issued commercial papers, mostly for a 14-day period offering 7.5-8% yield, specifically to invest money in these IPOs.
According to the report, Infina Finance issued CPs worth Rs 8,500 crore for financing the two IPOs, while India Infoline Finance raised Rs 5,000 crore only for Ujjivan IPO. Aditya Birla Finance and JM Financial Properties issued CPs worth Rs 5,000 crore and Rs 4,000 crore, respectively, while IIFL Wealth Finance and JM Financial Products raised Rs 3,000 crore each to fund both the IPOs. Sharekhan BNP Paribas Financial Services reportedly raised Rs 2,000 crore, while IIFL Wealth Management and JM Financial Capital issued CPs worth Rs 1,000 crore each.
It is not surprising then that Ujjivan Small Finance Bank’s Rs 750-crore IPO was oversubscribed on the very first day of bidding on Monday. Meanwhile, the recently-concluded CSB Bank IPO’s high net-worth individual (HNI) portion was also oversubscribed by a massive 165 times.
Niraj Murarka, head – credit at IIFL Wealth, told Economic Times: “We are very selective about doing CP borrowing and typically opt for this route when there is certainty that the money is required for a very limited period of time and there is absolute certainty that the money will come back to us in the stipulated time.”
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