Bharti Infratel Ltd is listing today on the stock exchanges—the BSE Ltd and the National Stock Exchange Ltd. The company had opened its initial public offer of shares on 11 December and closed the issue for subscription on 14 December; that was two weeks before today’s listing date.
If you, too, plan to apply for shares in new companies approaching the primary market with an IPO, you must account for the fact that it takes about 12 days for a company to get listed on the stock exchanges after the issue is closed for application. Though the time taken has been reduced significantly, it may still affect your decision of investing.
The time factor
Before May 2010, the average time taken for an issue to get listed was about 22 days. A lot can change in the secondary market in terms of direction and sentiment over such a long period. If the time taken between the closure of issue and its listing is large, there is always the chance that market conditions may change in way that they affect the demand for the shares. In fact, market conditions can also change the earning prospects of the issuing company.
Therefore, it is in the general interest of the investors and the market that the time taken for the entire process is the minimum possible. Hence, the capital markets regulator, the Securities and Exchange Board of India (Sebi), in consultation with other stakeholders, decided to cut the time taken between the closure of issue and listing of shares.
Will the time gap be reduced further?
A lot of experts argue that there is further scope of reducing the time gap. Sebi has also shown its intention to bring it down to about seven days since most of the processes are done through electronic platforms. In the current scheme of things, the investor should get the allotment after a maximum of nine working days post the closure of the issue. Working days have been defined as all days, except Sundays and bank holidays.