The IPO market is changing.
The SEBI study released this week reveals that significant regulatory changes have reshaped HNI activity in IPOs. In April 2022, RBI capped NBFC funding for HNIs at ₹1 crore, and SEBI moved from a pro-rata share allocation system to a lottery-based system, levelling the playing field.
These changes have notably reduced the participation of Big Ticket HNI Investors (applying for more than ₹1 crore). The number of such investors per IPO has fallen from 626 per IPO to just 20 per IPO, while the oversubscription rate in the HNI category dropped from 38x to 17x. Additionally, the exit rate of these investors within a week of allotment fell from 70% to 25%.
HNIs are now buying less but for the longer term.
