Is the Bajaj Housing Finance IPO response a sign of market instability?

Deepak Shenoy warns that the Rs 3 lakh crore bidding surge for Bajaj Housing Finance's IPO is alarming. He compares it to a SME's Rs 4,000 crore bid, noting that Rs 300,000 cr. locked in bank accounts could vanish if the market tanks within two days, making the scenario 'way scarier' than typical IPO oversubscription.

Business Today: Why Deepak Thinks the Bajaj Housing Finance IPO Response Is Scary

Deepak Shenoy, Founder and CEO of Capitalmind, views the overwhelming response to Bajaj Housing Finance's IPO as a concerning trend, calling it “way more scary than a little two-showroom SME getting Rs 4,000 crore bids.” With bids exceeding Rs 3.2 lakh crore, Shenoy warns that locking up such a large amount of capital could pose liquidity risks if the market declines shortly after the IPO. He emphasizes the heightened risk compared to smaller IPOs, where massive bids don’t lock up as much market liquidity.

12 Sept 2024CM Team1 min read

Quick Facts

Is the Bajaj Housing Finance IPO response a sign of market instability?: Deepak Shenoy warns that the Rs 3 lakh crore bidding surge for Bajaj Housing Finance's IPO is alarming. He compares it to a SME's Rs 4,000 crore bid, noting that Rs 300,000 cr. locked in bank accounts could vanish if the market tanks within two days, making the scenario 'way scarier' than typical IPO oversubscription.

Business Today: Deepak Shenoy, founder and CEO of finance advisory firm Capitalmind, thinks that the outrageous response to Bajaj Housing Finance’s initial public offering (IPO) is a rather scary scenario. He said it is far more scary than “a little two-showroom SME getting bids of Rs 4,000 crore”.

Bajaj Housing became the first company to cross Rs 3 lakh crore bidding value for a Rs 6,560-crore IPO during the initial share sale phase.

“This is way more scary than a little 2 showroom SME getting bids of (Rs) 4000 cr. Because when you have (Rs) 300,000 cr. locked in bank accounts, this much money is not available for people to buy if the market tanks in the next two days. Just two days, of course. Number way scarier though,” he said in a post.

(Read more at Business Today)