2017 has been the year of IPOs. This year, as many as about 30 companies have raised over Rs 50,000 crore so far. Five mega insurance IPOs including SBI Life and ICICI Lombard — are poised to raise nearly Rs 40,000 crore by the end of the year, and even IPO of smaller companies such as Prataap Snacks and DMart (Avenue Supermarts) witnessed unprecedented oversubscriptions.
However, this year, the number of IPOs where promoters were selling their shares, or part exiting their shareholding in the companies, was high as well. When shareholders sell their shares through IPO, it means the proceeds made from the IPO will go directly to promoters, not companies.
An initial public offering (IPO) is the first time that the stock of a private company is offered to the public. The company offers fresh shares for IPO, while company’s promoters can also sell their shares through offer for sale. In offer for sale, money received through IPO will not go to the company, but will go to promoters who are selling their shares.
Here are few of the prominent IPOs of 2017, in which the promoters sold a part of their stakes
SBI Life: SBI Life Insurance’s Rs 8,400 crore IPO was oversubscribed 2.6 times. However, it was a pure offer for sale with SBI selling 8% stake and BNP Paribas selling 4%. The entire proceeding of Rs 8,400 crore went to its parent company SBI and BNP Paribas.
ICICI Lombard: ICICI General Insurance Co Ltd’s Rs 5,700 crore IPO was oversubscribed 1.97 times. It was also an entirely offer for sale IPO with its parent company ICICI Bank and Fairfax diluting 19% shares for Rs 5,700 crore.
Godrej Agrovet: Godrej Agrovet Ltd’s Rs 1,157 crore IPO had a total issue of 1.8 crore shares, of which the parent company Godrej Industries sold shares worth Rs 300 crore.
Reliance Nippon: Reliance Nippon Life Asset Management will open its IPO on October 25. The company is aiming to raise around Rs 1,542 crore. However, with an offer for sale comprising 3.66 crore shares, Rs 925.2 crore of the total Rs 1,542 crore will go the promoters Nippon Life and Reliance Capital.
AU Small Finance Bank: AU Small Finance Bank’s Rs 1,912 crore public issue was also oversubscribed by 53 times. Of the total issue of 5.35 crore shares, 3.77 crore shares were offered by the promoters, through which their proceed was Rs 1,349 crore.
BSE Ltd: The IPO of BSE Ltd, owner of the Bombay Stock Exchange was also purely an offer for sale. BSE’s existing shareholders sold a total of 1.54 crore shares for a total of Rs 1,241 crore, with no fresh equity going to the company.
Security and Intelligence Services: Security and Intelligence Services India Ltd’s Rs 780 crore IPO was oversubscribed 6.96 times. While the total issue was 5.4 lakh shares, promoters sold 5.12 lakh shares, making Rs 751 core.
Eris Lifesciences Ltd: Eris Lifesciences Ltd’s Rs 1,741 crore IPO was oversubscribed 3.28 times. It was also entirely a sale of existing shares, with ChrysCapital and some of the founding shareholders selling 1.54 crore shares and netting all the proceeds.