The pipeline of Indian initial public offerings (IPOs) is growing with more than 30 companies currently in the hunt for a sum of close to R16,000-17,000 crore, reports Ankit Doshi in Mumbai. While in some instances private equity investors are looking to exit, in others promoters are hoping to raise money to grow their businesses.
“IPOs are certainly returning and that’s good, otherwise there is too much money chasing limited paper, which could lead to an asset bubble,” said V Jayasankar, head of ECM, Kotak Investment Banking. Data also highlighted that an additional 15-18 firms have filed their draft prospectuses with the capital markets regulator.
Nine, including Lavasa, Rashtriya Ispat Nigam, Shree Pushkar Chemicals, Sadbhav Infrastructure and Manpasand Beverages, have valid approvals from Sebi.
These companies can raise about Rs 5,000 crore before their approvals lapse this year, data compiled by Prime Database show. Sebi approvals are valid for one year from the date on which they are issued.
Work on most of the IPOs started only after June 2014 after the results of the India’s general election, investment bankers said, explaining that the IPO process is usually a six- to nine-month process. Names include AGS Transact Technologies, Nuziveedu Seeds, SH Kelkar and Company, Navkar Corp, Prabhat Dairy, Shree Shubham Logistics, Precision Camshafts and SSIPL Retail, among others that have the potential to raise an upward of Rs 8,000 crore.
“The India story is definitely back. The sentiments significantly changed after the outcome of the elections and there is a much stronger belief in the economic prospects going forward than before the elections. Quality deals will always find buyers and the fund raising momentum will remain strong,” Sanjay Bajaj, MD and head, ECM, HSBC Securities and Capital Markets had said in a recent email reply to a query from FE.
In May 2014, the Narendra Modi-led NDA won 334 out of 543 seats, prompting many Indian and foreign investors to raise their weightage on equity markets viewing the next five years as of decisive governance, more market-based and friendly economics, and a focus on growth, jobs and investment. Thirteen out of 16 opinion surveys conducted since January 2013 had predicted the BJP-led NDA party to win the election.
Moreover, companies such as DTDC, L&T Infotech, GoAir, Indigo Airlines, HAL and Alkem Laboratories have shown interest in tapping primary markets and engaged financial advisers to reap the benefits of the upturn in India’s growth story.
Even Sebi’s move to streamline the IPO process and give faster clearance to draft documents filed with the market regulator will encourage more companies to line-up, experts said.
So far this calendar year, seven companies launched their IPOs on the main board and 12 companies listed on the SME platform. Names include Inox Wind, VRL Logistics, MEP Infrastructure, PNC Infratech, UFO Moviez, Adlabds Entertainment and Ortel Communications. These companies cumulatively raised Rs 3,469 crore in the first five months of calendar 2015, data compiled from Prime Database showed.
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