The initial public offering (IPO) market attracted as much as Rs 4,485 crore of investment as six issues – three mainboard and small and medium enterprises each – opened on Wednesday.
In fact, the demand was so much that after removing the anchor portion of Rs 1,528 crore, the demand was triple of the combined issue sizes.
Mainboard IPOs see strong retail frenzy
The three mainboard issues – Dev Accelerator (5.3x), Urban Company 3.1x and Shringar House of Mangalsutra 2x — attracted investment. The largest of the three, the Rs 1,900 crore IPO of Gurugram-based Urban was fully subscribed within just two hours of the bidding window.
The retail frenzy was evident. Dev Accelerator’s Rs 143 crore IPO’s retail portion was subscribed 19.4x whereas for Urban Company, it was 7x and for Shringar House of Mangalsutra, it was almost 3x. The non institutional investors (NIIs) were equally active, bidding well more than 4x each for Urban Company and Dev Accelerator. They bid 2.7 times for Shringar House of Mangalsutra.
“There is optimism about markets rising around the festive season and retail investors are confident of listing gains,” said a fund manager.
Market outlook and SME response
Investment bankers said the IPO volumes this year will likely beat the $19 billion worth IPOs in 2024. Investors, both foreign (FPIs) and domestic (DIIs) share the optimism for newly-listed companies.
“Investors prefer the liquidity that large issues bring,” said Neha Agarwal, MD, Equity Capital Markets (ECM) at JM Financial Institutional Securities.
The huge appetite for fresh shares validates the Securities and Exchanges Board of India (Sebi) measures to ease dilution pressures of large listings and for improved efficacy of India’s primary markets, one of the most active globally. Sebi is using artificial intelligence to scan documents for shortcomings and engaging with merchant bankers to speed up clarifications needed to expedite IPO approvals, a Reuters report said on Tuesday.
“All the unicorns are thinking of Indian IPOs. Even companies that were incorporated in the US are now domiciling in India so that they can go public here,” said Sudarshan Ramakrishnan, co-head of investment banking at Goldman Sachs (India) in a report on primary markets.
The IPO of Urban Company, the leading tech-enabled home services platform, was assisted by Kotak Mahindra Capital Company, Morgan Stanley India, Goldman Sachs (India) and JM Financial. The qualified buyers (QIB) segment was subscribed 1.3 times.
Three SME IPOs, two of which opened on Wednesday, were bid moderately. Jai Ambe Supermarkets received 1.5 times overall bids; Galaxy Medicare was bid 0.43 times and Taurian MPS that opened Tuesday was bid 0.88 times.