Why did domestic investors miss investing in IPO in America?


Mumbai: There is a tremendous craze among the investors regarding the IPO. The response to the IPO of Burger King and Midges Bectors is evidence of this. Robinhood investors also wanted to invest in Airbnb’s IPO which came to America.

However, they could not invest in it. Actually, there is no platform in India that gives an opportunity to invest in the IPO of the American market. The rules for investing in IPOs in the US are quite complex.

In the US market, bankers directly distribute large shares of IPOs to institutions and very rich investors. However, some portion of the investment also remains for small and retail investors. The minimum investment in this is $ 2,50,000 i.e. around Rs 1.85 crore.

Brokers believe that this level is much higher than the minimum investment in an IPO in India, even if investors are investing only under LRS. The minimum amount of investment in an Indian IPO is between Rs 14,000-15,000.

Satish Srivastava, founder and CEO of Stockl, said, “The demand for tech IPOs in Indian customers is high, as people have been associated with these startups for a long time. Indian investors have a distinct attraction towards American companies.”

He said, “90 percent of the IPO allocation in the US market goes to institutional investors and the remaining 10 percent to retail investors. It is difficult for retail investors to invest in IPOs not only in India but also in America.”

Many domestic brokerage firms have joined hands with Stockl, Wasted Finance, Interactive Brokers and Winvesta to give Indian investors the opportunity to invest in overseas markets. Most brokerages said their technology partners are unable to allow investments in US IPOs due to process constraints.

Viram Shah, co-founder of Wasted Finance, said, “Unlike India in the US, the exchange does not allocate IPOs. The entire responsibility of the IPO rests with the bankers, who allot the shares.”

AirBNB placed an issue price of $ 68 for the share in the IPO, which rose to $ 168 on the day of listing and closed at $ 144.70. There is a lot of craze on the IPO in America as well.

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When a company is listed, people associated with it such as management and private investors cannot sell their shares for six months. During this time, the price of shares fluctuates rapidly.

Currently, various platforms like ICICI Securities, Axis Securities, Kotak Securities, HDFC Securities, Geojit Financial Services, Upstox, MatterTrust, Winvesta, Stockl give Indian investors the opportunity to invest in the overseas market.

Many international brokerage firms help Indian investors invest in US stocks, mutual funds and ETFs. Indian investors can invest in the US market with just $ 1. Several shares of one share can also be purchased in the US market.

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