More companies are harbouring aspirations to go public, following a sharp market rebound after June\u2019s nadir.<\/p>\n
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In August, seven companies expecting to raise a cumulative Rs 10,425 crore filed their draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (Sebi).<\/p>\n
The amount they are looking to mop up is the highest since March, when 13 companies filed their DRHPs to raise a combined Rs 19,494 crore, reveals data provided by PRIME Database \u2013 a source of comprehensive information on all capital market offerings.<\/p>\n
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Of the seven filings in August, four were by companies looking to raise over Rs 1,000 crore.<\/p>\n
These included Go Digit General Insurance (estimated issue size Rs 5,000 crore), Concord Biotech (Rs 2,000 crore), and Avalon Technologies (Rs 1,025 crore).<\/p>\n
Investment bankers say a sharp upmove in the market and an improvement in valuations have helped revitalise sentiment.<\/p>\n
In the preceding three months, nearly six DRHPs hoping to raise an average Rs 4,800 crore got filed.<\/p>\n
From June lows, the benchmark indices have rebound 15 per cent, defying weak global cues.<\/p>\n
Typically, Sebi takes between two and four months to clear a DRHP.<\/p>\n
Consequently, companies filing their offer documents now will hit the market by the end of this year.<\/p>\n
Experts say one can expect a robust IPO pipeline in the last quarter of this calendar year (CY22) and early 2023, if secondary markets remain sanguine.<\/p>\n
“There have been a few good listings. Overseas investor flows have turned positive.<\/p>\n
“This is fertile ground for an IPO if fittingly priced. One is far more upbeat now.<\/p>\n
“In the next few months, we will see greater activity in the IPO market than in the last quarter,\u201d observes Nipun Goel, head-investment banking, IIFL Securities.<\/p>\n
Only three mainboard IPOs have been launched so far this quarter due to capricious market conditions.<\/p>\n
However, with Indian markets showing resilience in the face of a global maelstrom, more companies may come forth.<\/p>\n
\u201cValuations have to be reasonable. With the kind of volatility in markets in seven\/eight months, investors want a high margin of safety.<\/p>\n
“Companies and bankers also recognise the need to have prices that are fair to every stakeholder \u2013 company\/investor notwithstanding.<\/p>\n
“If priced well, if a company is positioned well and has a unique selling proposition, there will be growing appetite. Investors are being selective, but there is a clear desire to invest in new companies,\u201d Goel points out.<\/p>\n
Currently, there are over 70 companies wanting to raise a cumulative Rs 1.1 trillion sitting on valid Sebi approvals to launch IPOs, according to PRIME Database.<\/p>\n
Another 50 companies are awaiting Sebi approval to launch IPOs worth Rs 60,000 crore.<\/p>\n
With domestic and foreign flows turning favourable, some may have a shot at listing, say experts.<\/p>\n
Pranav Haldea, managing director, PRIME Database, says there is enough liquidity sloshing in the market, encouraging companies to test the waters.<\/p>\n
\u201cForeign portfolio investors have returned to the market after months of selling. Retail and domestic institutions are also staying invested.<\/p>\n
“There are high levels of dry powder available.<\/p>\n
“We don\u2019t need to necessarily look at new filings to gauge the prospect of higher fund-raising from the primary market.<\/p>\n
“There is a vast pipeline of companies biding time.<\/p>\n
“Even if those companies were to hit the market, the amount raised will be noteworthy,\u201d says Haldea.<\/p>\n
During the first eight months of CY22, 18 companies have raised Rs 41,713 crore through IPOs.<\/p>\n
By comparison, 36 companies raised Rs 60,289 crore during the same period last year.<\/p>\n<\/div>\n[ad_2]\n<\/p>\n
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