WITH THE IPO momentum holding strong, calendar year 2021 is set to witness record fund raising through initial public offerings.
As on date, India Inc has raised over Rs 42,000 crore though 28 IPOs in seven months till date. If the number of companies which have filed their issues with SEBI or have shown intent to list is any indication, this could easily cross Rs 1 lakh crore by December should the secondary market maintain its tempo.
Besides companies in traditional businesses, the bumper listing of Zomato is set to trigger a host of IPOs from other new-age companies including Paytm, PhonePe, MobiKwik, Grofers, PolicyBazaar, Flipkart Internet, Delhivery among others that have shown their intention to list this year.
Such hectic fund raising through IPOs was last witnessed in 2017 when companies raised Rs 67,147 crore through 36 IPOs. This year, India Inc has already raised over Rs 42,000 crore though 28 IPOs. Data compiled by Prime Database shows that 34 more companies have already filed offer documents with Sebi, and are estimated to raise over Rs 71,000 crore through IPOs.
Further, 54 companies have announced their intention to tap the primary market this year, and just 21 of them are estimated to raise over Rs 70,000 crore. These do not include state-owned Life Insurance Corporation, which could raise around Rs 50,000 crore or more depending on its estimated valuation of anywhere between Rs 10 lakh crore and Rs 15 lakh crore.
Pranav Haldea, Managing Director, Prime Database, said it is critical for markets to remain bullish for deals 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,” said Haldea.
Despite concerns of a third Covid-19 wave, stretched valuations and inflation, the market has shown appetite for IPOs. ‘Seize the opportunity’ seems 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,” said Nirai Shah, Head of Equity Research, Samco Securities.