Rinchen Wangdi, general manager at a public sector bank in Mumbai, had applied for 225 shares in Reliance Power Ltd’s initial public offering (IPO) through his demat account with ICICI Bank Ltd. The issue was listed on Monday but until Tuesday, he has neither got the shares in his account nor the refund of the amount he had invested.
As a retail investor, he was offered the shares at Rs430, a discount to the issue price of Rs450, and was required to put in 25% of the money upfront. Those who had applied for 225 shares have been allotted 15. He would have liked to sell the shares when they got listed but could not do so because he did not know whether or not he has been allotted them.
Another retail investor, Chandrakant Tukaram Desai, a retired government employee, applied in the retail category but he is still unaware of the status of his application. He isn’t worried about missing the opportunity to exit the stock when it hit Rs599 but is upset for not getting the refund.
Shares of Reliance Power closed on Tuesday at Rs354.55 each, a fall of more than 21% to their issue price of Rs450.
High net worth investors (HNIs) for whom usually 10% of shares in any public issue is reserved, have also faced this problem. Pradeep Bhavnani, a Mumbai-based broker, had put in three applications in the HNI category. He claims to have invested Rs33 lakh but says he has neither got the shares nor the refund.
“If I had received the allotted shares, I could have sold it on the listing day and bought it at a lower price. I am in fix now,” said Bhavnani. He plans to appeal to the market regulator, the Securities and Exchange Board of India (Sebi).
People familiar with the development, who did not wish to be identified, said the regulator has got a few complaints from retail applicants who have not been allotted shares.
Nearly five million retail investors had applied for the shares in the IPO that was subscribed 73 times over.
In any IPO, once the issuing company finalizes the basis of allotment with the help of the share registrars, it has to ensure that the shares are credited to the successful applicants within two working days. Those who are not allotted shares are refunded the money through electronic banking channels. In the case of Reliance Power IPO, the basis of allotment was finalized on February 1. Karvy Computershare Pvt. Ltd was the registrar to the issue.
According to Reliance Power officials, the shares have been credited in all “valid cases” and the refunds have been sent. Investors who are successful allottees but have not provided valid demat account details have been asked to provide the details for crediting the shares, the officials said.
HDFC Bank Ltd, the sole refund bank for the IPO, said it hasn’t faced any problem. “The refund process started on 1 February. Since then, we have refunded Rs90,000 crore through electronic channels to around 23 lakh applicants. The rest of the applicants are being paid through the refund orders,” said Bhavesh Zaveri, head, wholesale banking operations and cash management at HDFC Bank.
“There are occasions when applicants do not provide correct demat account details or they apply through somebody else’s demat account. Such applications do not get rejected, but there could be a delay in the processing of allotment or the refund. Since the Reliance Power IPO got large number of applications, chances of errors at the brokers end is also possible,” said a senior executive at a share registry firm, asking not to be identified.
Khushboo Narayan contributed to this story