With the IPO momentum holding sturdy, calendar year 2021 is set to witness record fund raising by way of initial public offerings.
As on date, India Inc has raised more than Rs 42,000 crore even though 28 IPOs in seven months till date. If the quantity of firms which have filed their concerns with SEBI or have shown intent to list is any indication, this could simply cross Rs 1 lakh crore by December should really the secondary marketplace preserve its tempo.
Besides firms in regular enterprises, the bumper listing of Zomato is set to trigger a host of IPOs from other new-age firms such as Paytm, PhonePe, MobiKwik, Grofers, PolicyBazaar, Flipkart Internet, Delhivery amongst other individuals that have shown their intention to list this year.
Such hectic fund raising by way of IPOs was last witnessed in 2017 when firms raised Rs 67,147 crore by way of 36 IPOs. This year, India Inc has currently raised more than Rs 42,000 crore even though 28 IPOs. Data compiled by Prime Database shows that 34 more firms have currently filed provide documents with Sebi, and are estimated to raise more than Rs 71,000 crore by way of IPOs.
Further, 54 firms have announced their intention to tap the main marketplace this year, and just 21 of them are estimated to raise more than Rs 70,000 crore. These do not incorporate state-owned Life Insurance Corporation, which could raise about Rs 50,000 crore or more based on its estimated valuation of anyplace amongst Rs 10 lakh crore and Rs 15 lakh crore.
Pranav Haldea, Managing Director, Prime Database, mentioned it is essential for markets to stay bullish for bargains to close. “Even if the companies have Sebi approval, they will launch the issue only if the market is in bullish territory. In 2013, we did a study which showed that companies holding Sebi approval for IPOs worth Rs 75,000 crore allowed these to lapse when the markets turned bearish. So, while the pipeline is strong, bullishness in the market will be key for their conclusion,” mentioned Haldea.
Despite issues of a third Covid-19 wave, stretched valuations and inflation, the marketplace has shown appetite for IPOs. ‘Seize the opportunity’ appears to be the axiom guiding retail participants. “What is significant is banks and financial institutions have, of late, shown equal if not more interest than retail participants in primary issues. They have nearly doubled their investments in IPOs reaching four-year highs and we are only over half way through the year,” mentioned Nirai Shah, Head of Equity Research, Samco Securities.
The excitement does not finish right here pension regulator PFRDA is thinking about permitting pension funds to broaden their investment spectrum to invest in eligible IPOs and comparable main concerns with specific predefined criteria. “This unequivocally shows the IPO party is far from being over, given our economy is flushed with liquidity,” Shah mentioned.
While the Zomato IPO showed indicators of investor maturity and appetite for new age firms, Sebi chairman Ajay Tyagi not too long ago mentioned the filings and public offerings reflect the maturity of the marketplace to accept the enterprise model of new age tech firms, which are not amenable to valuation by way of traditional metrics of profitability.
“Along with the robust growth, it is heartening to note that our markets are entering a new era with several new age tech companies preferring to list domestically. Our markets offer as attractive a fund-raising proposition as any overseas market,” Tyagi mentioned at the NISM capital marketplace conference last week.
Successful IPOs of such firms are probably to attract more funds in domestic markets, hence producing a new ecosystem of entrepreneurs and investors, Tyagi mentioned.
After Zomato, the next mega unicorn listing is probably to be One97 Communications, the parent firm of Paytm, a major digital ecosystem for customers and merchants, which not too long ago filed the draft red herring prospectus with the regulator SEBI for a Rs 16,600 crore IPO. This could be one of the biggest IPOs in current years.
The company’s income has been expanding strongly, when losses have been coming down. It announced a loss of Rs 1,701 crore in FY’21, reduce than Rs 2,942 crore in FY’20 and Rs 4,230 crore in FY’19.
LIC, which is preparing the groundwork for the IPO, is set to hit the capital marketplace in the fourth quarter of FY’22 and could raise amongst Rs 55,000 and 80,000 crore.
As for the all round resource mobilisation by way of capital markets, firms raised Rs 10.12 lakh crore in FY21 regardless of this becoming a pandemic-impacted year, surpassing preceding year’s figures of Rs 9.96 lakh crore.