New Delhi: Fundraising through initial public offering (IPO) is expected in October-November, with at least 30 companies looking to collectively raise over Rs 45,000 crore through initial share-sale, merchant banking sources said. said.
A substantial portion of the total fundraising will be received by technology-driven companies.
Food delivery company Zomato’s successful IPO, which was subscribed more than 38 times, encouraged new-age tech companies to come up with their primary share-sales.
Historically, companies like Zomato have raised funds from private equity players and IPOs have opened up a new source of funding for new-age tech companies, said Jyoti Roy, vice president (equity strategist), Angel One.
Firms that are expected to raise funds through their IPOs during October-November include Policybazaar (Rs 6,017 crore), Emcure Pharmaceuticals (Rs 4,500 crore), Nykaa (Rs 4,000 crore), CMS Info Systems (Rs 2,000 crore) , MobiKwik Systems (Rs. 1,900 crore), merchant banking sources said.
Apart from this, Northern Arc Capital (Rs 1,800 crore), Exigo (Rs 1600 crore), Sapphire Foods (Rs 1500 crore), Fincare Small Finance Bank (Rs 1,330 crore), Sterlite Power (Rs 1,250 crore), Rategain Travel Technologies (Rs 1,200 crore) ) crore) and Supriya Lifesciences (Rs 1,200 crore) may issue their IPOs during the period under review.
Angel One’s Roy attributed the impressive IPO pipeline in the coming month to a number of factors, including a stronger-than-expected recovery in the economy after the second wave, continued FPI and domestic inflows into markets, and increased retail participation in the stock market. . in the past year.
Kaushalendra Singh Sengar, Founder and CEO, INVEST19 said that if the current market conditions remain stable or do not change much, the IPO boom is expected to increase in the coming year.
True Beacon and Zerodha co-founder Nikhil Kamath made a similar statement saying that if the bullish momentum continues for the next 1-2 years, the IPO rush will continue. Furthermore, the technology sector is expected to remain a major market driver.
So far, in 2021, 40 companies have issued their IPOs to raise Rs 64,217 crore. In addition, Aditya Birla Sun Life AMC will commence its initial share sale of Rs 2,778 crore on September 29.
Besides these, PowerGrid InvIT, an infrastructure investment trust (InvIT) sponsored by Power Grid Corporation of India, raised Rs 7,735 crore through its IPO, and Brookfield India Real Estate Trust raised Rs 3,800 crore through its initial share-sale.
This was much higher than the Rs 26,611 crore raised by 15 companies through initial share-sales throughout 2020.
Such impressive fundraising through IPOs was last seen in 2017 when the firms raised Rs 67,147 crore through 36 initial share-sales.
According to Kamath, IPOs depend heavily on market cycles and the IPO enthusiasm that has been witnessed in the last 18 months is a function of the current bullish cycle. Companies want to take advantage of investor sentiments.
Vikas Singhania, CEO, TradeSmart said, “The market is scaling new heights and the strong response we are seeing in the primary market is driving those companies to come and take advantage of the market.”
He further added that companies are raising funds for future growth capital or inorganic growth opportunities.
Many IPOs are offers for sale (OFS), where private equity players or promoters want to redeem part of their stake.
“Nowadays, the whole process of IPO attracts a lot of attention to such companies which act as indirect promotions,” Kamat said.
Initial share-sales are getting tremendous applications from investors and IPO subscriptions are manifold. This has prompted companies to raise funds through IPOs.
The initial share-sales of nearly a dozen companies including Paras Defense & Space Technologies, MTAR Technologies, Easy Trip Planners, Devyani International, Rolex Rings, Tatva Chintan Pharma Chem and Nazra Technologies were subscribed more than 100 times.
Interestingly, most of the IPOs in the current calendar year are opening with a premium over the issue price, indicating a strong investor appetite.
Lakshmi Organic Industries, MTAR Technologies, Easy Trip Planners, GR Infraprojects, Clean Science & Technology, Macrotech Developers and Amy Organics which are listed this year are trading above their issue price, which is in the range of 110 to 320 per cent with Smart Giving returns. Since the listing, for investors.
Sengar of INVEST19 said that with the current favorable interest rate scenario as well as high liquidity, financial institutions offer IPO funding products at lower rates. The low cost of funding will continue to support the IPO boom.
Moreover, disinvestment of PSUs will be a blockbuster to support the ongoing IPO boom. The listing of LIC is expected in 2021-2022, which will be one of the largest IPOs in the history of the Indian market. This will help in the current boom in the IPO market for 2022, he added.
Earlier this month, Sebi chairman Ajay Tyagi said growth-oriented technology companies have raised Rs 15,000 crore through initial share sale in the last 18 months and about Rs 30,000 crore IPOs by such firms are in the pipeline.
He said, “The growing number of unicorns in the startup ecosystem is a testament to the arrival of new-age tech companies in our economy. These companies often follow a unique business model that focuses more on rapid growth than immediate profitability. does.”
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