Pre-IPO lock-in expiries worth $15 billion to hit market in May, Swiggy in focus: Nuvama

While not all shares will be sold, analysts expect market volatility and potential profit-booking.

During the month of May, around 20 firms are slated to have their pre-listing shareholder lock-ins lifted, amounting to a total of $14.7 billion, according to Nuvama Institutional Equities. Between April 30 and July 28, a total of 58 companies are slated to have their lock-ins lifted, amounting to $26 billion.

While the value pertains to the total lock-up opening shares, it’s important to note that not all of these shares will come for sale as a sizable portion of these shares are also held by promoter and group entities.

Over half the value of the lock-in expiry is likely to come from recently listed food delivery player, Swiggy. Nuvama has valued Swiggy’s shares at over $7 billion, for 85 percent of Swiggy’s total outstanding stock, and is expected to become available for trading on May 13, on the six month lock-in expiry.

Swiggy's stock is likely to be volatile in the near-term on account of market speculation around possible exits by some pre-IPO shareholders whose lock-in is set to expire, noted domestic brokerage JM Financial.

In fact, the total stock that is currently locked in is ~83 percent, which is valued at R 66,000 crore. Even if one were to assume that only 15 percent of company’s stake will be available for trade immediately post expiry, the total outflows could be ~Rs 12,000 crore, broadly equal to the total IPO size of Rs 11,300 crore, added JM Financial.

Dr. Agarwal's Health Care, Ajax Engineering, Hexaware Technologies and Quality Power Electrical are slated to see their three-month lock-in open in May.

Apart from Swiggy, these firm are likely to see their six-month and beyond lock-ins expire during the month: Deepak Builders & Engineers, Blue Jet Health, Afcons Infrastructure, Honasa Consumer,
Rainbow Child, Cello World, ACME Solar Holdings, Sagility India, ESAF Small Finance Bank, Niva Bupa Health, Aadhar Housing Finance, ASK Automotive, Prudent Corp, Zinka Logistics, Venus Pipes, Paradeep Phosphates, Tata Technologies, Gandhar Oil Refinery, and Fedbank Financial Services.

As per regulatory norms, anchor investors are subject to a lock-in period of 90 days for half of their allocated shares and 30 days for the remaining half from the date of allotment. Other investors face a six-month lock-in, while promoters are required to hold their shares for 18 months if their allocation is up to 20 percent of the post-issue paid-up capital. If the allocation exceeds 20 percent, the lock-in drops to six months.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.