Has IPO for locals reached its level of saturation? Shivam Cement and Union Hydropower fail to impress the locals of project affected area

Recently, IPO issuance of two companies for the locals of project affected area have gone unsubscribed. The highly anticipated IPO of Shivam Cement along with the IPO of Union Hydropower have not received anticipated support from the locals.

Out of the two companies, Shivam Cement had issued 8,80,000 units at Rs 300 per unit i.e Rs 100 plus premium of Rs 200 for the locals of project affected area. But only 2,00,240 units were subscribed and allotted. Siddhartha Capital Limited was its issue manager.

The company failed to sell more than 77% of its total issued shares.

Similarly, Union Hydropower had also issued 7,50,000 unit shares for the locals of Lamjung district at par value of Rs 100. Out of the total units, only 1,28,210 units were subscribed and allotted to the valid applicants. Laxmi Capital Market Limited was appointed as the issue manager for the issue.

The company could only sell about 17% of total issue.

The remaining units of both the companies will be again issued to the general public in the near future. The shares of Union Hydropower will be sold at Rs 100 per unit while the shares of Shivam Cements will be sold at Rs 400 per unit to the general public.

But the most intriguing thing is that the locals have showing lesser and lesser interest in such kind of issue. In the recent case, only Upper Tamakoshi can be taken as an exception. It should also be noted that the IPO of Upper Tamakoshi was worth Rs 1.05 arba while the combined amount of the issue of both companies stand at Rs 33.90 crore. The former was oversubscribed while the latter two were undersubscribed.

If the view of the analyst are considered, the main reason for the lack of interest shown by the locals in such issuance is mainly because of the lock-in period. Apart from that, during the issue of the IPO, the market was also in a bearish trend. In case of Shivam Cement it was also found that the price above regular price of Rs 100 has also discouraged the locals from investing in the share. It should be seen in the near future if the locals continue to treat the IPO issued specially for them in the same way or they will start supporting the issue.