Shares of PB Fintech traded in the unlisted market in the range of Rs 2,000-2,300, just a week ago. But the official IPO details have left buyers with sleepless nights, who bought shares at 50-60 per cent premium.
Dealers said selling at such high valuations defames the entire unlisted space. Rather many pre-IPO market brokers had warned investors to keep off the counter at these valuations.
This incubus dumping will haunt investors for as long as they have bought lock-in shares at more than double the price, said Sunil Chandak, Equity Strategist at Gennext Investrade.
Investors should understand that pre-IPO equity comes with a mandatory lock-in of six months as against a year earlier. The purchase at these astronomical valuations will burn their fingers ahead.
“It is a big learning for the investors who deal in the unlisted space without due diligence and just based on IPO buzz and hearsay,” Chandak added. “This space is more volatile and riskier, and wealth creation requires a lot of patience”
Even in the grey market, the premium has come off Rs 700 earlier to merely Rs 140-150 per share, reflecting how jittered the sentiments are.
Dinesh Gupta, co-founder, UnlistedZone said there was huge euphoria over the counter which led to pump and dump in the stocks by existing shareholders at much higher pricing.
The company is floating its IPO at a valuation close to $6 billion, which was almost half earlier when the issue was proposed, he said, adding that at this valuation, the issue is fully priced in and investors will not make much of it.
The IPO of PB Fintech will be open for subscription between 1-3 November and the fintech startup is eyeing to mop up Rs 6,017.50 crore from the primary market.
Both Gupta and Chandak believe that such misspellings dampen the investors trust in the pre-IPO market and will lead to regulatory actions over the unlisted space in the coming days.
Kotak Mahindra Capital, Morgan Stanley, Citigroup Global Markets India, ICICI Securities, HDFC Bank Ltd, IIFL Securities and Jefferies India are the book running lead managers to the issue.
