Mumbai: The initial public offer (IPO) from Precision Camshafts, which opened for public subscription on Wednesday, is the first public offer to hit the market under the mandatory ASBA regime and is expected to test the preparedness of the banking system to deal with the new regime.
Primary market participants said that the retail response to the offer would depend a lot on how far the banking industry has geared up to provide ASBA facilities in tier 2 and tier 3 cities and other remote locations across the country where small investors are residing.
ASBA refers to Application Supported by Blocked Amount under which an investor’s money leaves his account only upon successful allotment of shares in a public issue. Market regulator Sebi has made ASBA mandatory for all categories of investors with effect from January 1, 2016 with the objective of reducing the time period between the closure of an IPO and its listing to six days.
“The success of the new regime would depend on whether the bankers to the issue had made the facility of accepting ASBA forms at their branches where investors are holding their account. There could be challenges especially in smaller cities and remote locations where this facility was not so far made available,” said B. Madhuprasad, chairman, Association of Investment Bankers of Indian umbrella body representing merchant bankers.