The IPO rush is far from over and the primary market will see frenetic activity in the March 2020 quarter with nearly two dozen companies are looking to collectively raise nearly Rs 44,000 crore through initial share-sales, merchant bankers said. Of the total fundraising, a large chunk will be garnered by technology-driven companies.
This comes after 63 companies mopped up a record Rs 1.2 lakh crore in 2021 through initial public offerings (IPOs) even as the pandemic gloom shadowed the broader economy. Apart from these firms, PowerGrid InvIT (Infrastructure Investment Trust) mopped up Rs 7,735 crore through its IPO, while Brookfield India Real Estate Trust raised Rs 3,800 crore through REIT (Real Estate Investment Trust).
Excessive liquidity, huge listing gains and increased retail investor participation spurred a persistent euphoria in the IPO market in 2021. The firms that are expected to raise funds through their IPOs during the March quarter include hotel aggregator OYO (Rs 8,430 crore) and supply chain company Delhivery (Rs 7,460 crore), the merchant bankers said.
In addition, Adani Wilmar (Rs 4,500 crore), Emcure Pharmaceuticals (Rs 4,000 crore), Vedant Fashions (Rs 2,500 crore), Paradeep Phosphates (Rs 2,200 core), Medanta (Rs 2,000 crore) and Ixigo (Rs 1,800 crore) are expected to float their initial share-sales, they added. Also, Skanray Technologies, Healthium Medtech, and Sahajanand Medical Technologies are likely to come out with their IPOs during the period under review, the merchant bankers said.
These firms are raising funds for organic and inorganic growth initiatives, debt payments and giving exits to existing shareholders. "Initial public listing by the companies is done to raise capital through the public which increases the liquidity of the share as well as helps in valuation discovery," said Eklavya, founder, Recur Club.
LearnApp.com founder and CEO Prateek Singh said the tech companies now want to expand globally and to do that, they will require capital; and this capital is being picked up through the IPO route. Besides, anchor investors in these companies have been waiting for an exit to get rewarded, this exit is being offered to the anchor investors through the IPO route, he added.
The continued activity in the primary market comes at a time when Sebi has decided to tighten the IPO rules to tackle the extreme volatility in the stock prices on their listing day. These measures include putting a cap on the quantum of issue proceeds a company can use for unidentified inorganic growth, as well as restricting the number of shares that can be offered by selling shareholders and increasing the lock-up of shares subscribed by anchor investors.
Yash Ashar, partner and head (capital markets) at Cyril Amarchand Mangaldas, said: "Inability to raise money for future unidentifiable acquisitions would impact capital raising plans of some unicorns, particularly, where such companies may not have any other use of capital and where existing shareholders are not keen to sell." He added that these amendments are mainly a reaction to several IPOs in 2021. "These proposed changes to the law could have a long-term impact... These changes may impact plans of issuers planning to list on Indian stock exchanges," he added.
