Bank Investments In IPO Hit A Four Year High

• ByAyushi Ray     |    July 21, 2021

Bank investments in IPO hit a four year high. Flush with liquidity and with few takers for loans, banks and financial institutions have dialled up their investments in initial public offerings (IPO) through the qualified institutional buyer (QIB) route, touching the highest point this year. According to a Mint analysis based on data sourced from Prime Database, banks and financial institutions almost doubled their investments in IPOs to ₹870 crore this year from ₹461 crore in 2019. And last year, even though the primary market stagnated for over six months due to Covid-related uncertainties, banks and financial institutions pumped in ₹698 crore into IPOs. It was 2017, when the record number was last attained : a whopping ₹4,548 crore through the QIB route.

Data showed that so far in 2021, IPOs have raised ₹27,417 crore against ₹26,108 crore last year, ₹11,036 crore in 2019 and ₹30,615 crore in 2018, respectively. The analysis excludes anchor investments and IPOs launched by government-run companies such as Garden Reach, MSTC, RVNL, IRCTC, Mazagon Dock and Lithika Infrastructure. Banks have been investing in IPOs through their treasury books over the past many years. Most banks take an internal approval for ₹300-500 crore and end up investing ₹50-100 crore in IPOs. However, their primary objective is often to make listing gains. The only exception was in 2019 when banks bailed out the IPO of Sterling and Wilson after it found it difficult to sail through.

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