September likely to witness a flood of locked-in shares

Mumbai: Locked-in shares of at least 10 companies could find their way into the open market in September as the deadline for investors to compulsorily hold these shares bought through pre-Initial Public Offer (IPO) placements ends. Computer Age Management (CAMS), Concord Biotech, SBFC Finance, Happiest Minds, Route Mobile, and Chemcon Speciality, are among the companies whose shares could see sellers during the month.

Ending of the lock-in period does not necessarily mean investors who received shares in the pre-IPO sale will offload their entire holdings. But, whether pre-IPO investors are selling or holding on will be of interest for traders as large blocks of selling tend to weigh down share prices in the near-term.

The lock-in period for pre-IPO investors differs for different types of investors. For instance, promoters must hold at least 20% of the shares received for a year from the IPO, while institutional investors must hold for at least six months. For an anchor investor, the lock-in period is 90 days on 50% of the shares allotted and a lock-in of 30 days on the remaining 50% of the shares allotted.

In April last year, the Securities and Exchange Board of India cut the lock-in period for investors who purchase shares in a pre-IPO issue, or promoters’ shareholding in excess of 20%, to six months from one year.

According to data compiled by Nuvama Alternative & Quantitative Research, the one-month lock-in period for Yatharth Hospital shares will end on September 1, while that of SBFC Finance and Concord Biotech will end on September 11 and September 13, respectively.

Three three-month lock-in periods for Ikio Lighting and HMA Agro will end on September 11 and September 27, respectively.

Similarly, the three-year lock-in periods for Happiest Minds and Route Mobile will end on September 15 and September 16, respectively.

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