HIDCL IPO Allotment Prediction: Small investors to get MINIMUM of 8%, more likely 10%,Big Investor to get 4.55% at most; up to Rs 12,000 under lottery

Hydroelectricity Investment & Development Company Limited (HIDCL) had floated Initial Public Offering (IPO) worth Rs.2 arba (2 crore unit shares) from Kartik 12 to Kartik 19, 2072. On the final day of the IPO, it has been oversubscribed by 17.5 times. Sushil Kumar Aryal, Deputy CEO of Citizen Investment Trust Ltd. said, “The total collection of the IPO is approximately Rs 35arba till the last day. Around 2 lakh 10 thousand application forms were received.” First of all, let’s see the laws and regulation of Nepal regarding IPO. Investors applying Rs 50,000 or below per application form are classified as small investors. Security Allotment Guideline 2068, states that at least 40% of the securities being offered in IPO must be allotted to the small investors. However, if the total amount from the small investors exceeds the 40% of the total collected amount then this rule does not apply. Out of 2 crore units being offered in HIDCL IPO, 4 lakh units are reserved for employees of HIDCL, 10 lakhs units to mutual funds and staggering 1.86 crore units to general public. As far as the information we have, the IPO has been oversubscribed by 17.5 times collecting total of Rs.35 arba from 210,000 applicants. We will be using conservative approach to calculate the amount of shares that might be allotted to the general public. When the final data comes in, the total number of applicants is expected to go well above 210,000. For our calculation, let’s assume that 186,000 applicants applied shares worth Rs 50,000 per application form. So, total amount collected would be Rs.9.3 arba which is approximately 26.57% of the total amount collected i.e. Rs.35 arba. As this amount collected from small investors group is less than 40% of the total collected amount, 40% of the shares being offered in the HIDCL IPO must be offered to the small investor. If all small investors in our assumptions (186,000) were to be given equal number of shares, then each small investor would get 40 units of HIDCL share. This comes out to be 8% of the 500 units applied by the small investor. This leaves big investors with 1.116 crore units of shares of HIDCL. Our calculation shows that the big investors are likely to be allocated 4.55% at most. Many BFIs, insurance companies have applied Rs.50 crore each. The pool of big investors in terms of amount collected is way higher than that of small investors. Thus, big investors are likely to get small piece of the pie. Sandeep Bickram Rana, fundamental analyst with ShareSansar, said, “In reality as all small investors in our assumptions have not applied Rs 50,000 each, the number of shares allotted to each small investor will be higher than 40 kitta. Looking at the numbers we have today, the small investors are likely to be allotted nearly 10% of the shares they have applied.” Pundits with ShareSansar predict that the investors applying below Rs 12,000 might fall under lottery. If the lottery system happens as predicted then the small investors are to get more than 8%.   Disclaimer: Please note, the final data are yet to be received from the issue manager of this IPO. The content of this article should only be used for informational purposes. The final allotment may vary depending on the allotment model used by the issue manager.