HNI's huge rush to NBFC for funding following a series of IPOs

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MUMBAI: As five companies enter the market to raise Rs 21,000 crore through public offerings within the next fortnight, there has been talk of rushing to non-banking financial companies (NBFCs) to get money from High Networth Individuals (HNIs) investors. Following the rush, interest rates have been hiked by NBFCs.

According to an estimate, NBFCs have set aside Rs 2.5 lakh crore for HNI.

The funding cost has also increased in view of the rush of IPOs. HNIs usually obtain short-term loans from NBFCs to apply for an IPO.

The IPO is also likely to see a massive influx of investors. Public payments are expected to be multiplied in the next fortnight.

In the next fortnight, Nayaka, Fino, Policy Bazar, SIS and Paytm together are coming up with Rs 216 crore.

The current year has seen widespread interest from investors, especially in the retail and HNI primary markets. The boom in the secondary market has made it easier for companies to raise money from the primary market.

HNIs are usually paid at 8 to 10 per cent to apply for an IPO, but there is talk of NBFCs charging an interest rate of 15 to 18 per cent as funding demands increase.

There is no denying that the RBI's decision that NBFCs will not be able to lend more than Rs 1 crore to investors looking to buy shares through an IPO from next financial year is likely to affect IPO lending.

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