The IPO frenzy is far from over, with nearly two dozen companies looking to raise nearly Rs 44,000 crore through initial public offerings in the March 2022 quarter, according to merchant bankers.
Technology-driven companies will receive a significant portion of the total fundraising.
This comes after 63 companies raised a total of Rs 1.2 lakh crore through initial public offerings (IPOs) in 2021, despite the looming pandemic.
PowerGrid InvIT (Infrastructure Investment Trust) raised Rs 7,735 crore through its IPO. While Brookfield India Real Estate Trust raised Rs 3,800 crore through its REIT (Real Estate Investment Trust).
In 2021, a persistent euphoria in the IPO market was fueled by excess liquidity, huge listing gains, and increased retail investor participation.
Hotel aggregator OYO (Rs 8,430 crore) and supply chain company Delhivery (Rs 7,460 crore) are among the companies expected to raise funds through IPOs in the March quarter, according to merchant bankers.
They also expect Adani Wilmar (Rs 4,500 crore), Emcure Pharmaceuticals (Rs 4,000 crore), Vedant Fashions (Rs 2,500 crore), Paradeep Phosphates (Rs 2,200 crore), Medanta (Rs 2,000 crore), and Ixigo (Rs 1,800 crore) to float their initial share sales.
Skanray Technologies, Healthium Medtech, and Sahajanand Medical Technologies are also expected to issue initial public offerings during the period under consideration, according to merchant bankers.
These companies are raising money to fund organic and inorganic growth initiatives, debt repayments, and shareholder exits.
“A company’s initial public listing is done to raise capital through the public Which increases the share’s liquidity and aids in valuation discovery,” said Eklavya, founder of Recur Club.
Prateek Singh, the founder, and CEO of LearnApp.com stated that tech companies now want to expand globally and to do so. They will need capital, which is being raised through the IPO route.
Furthermore, anchor investors in these companies have been waiting for an exit to be rewarded, and this exit is now available to them through the IPO route, he added.
The primary market’s continued activity comes as the Securities and Exchange Board of India (Sebi) has decided to tighten IPO rules to address the extreme volatility in stock prices on their listing day.
These measures include limiting the number of issue proceeds a company can use for unidentified inorganic growth. It limits the number of shares that selling shareholders can offer. They increase the lock-up period for shares subscribed by anchor investors.
“Inability to raise money for future unidentified acquisitions would impact capital raising plans of some unicorns. That is particularly where such companies may not have any other use of capital. Where existing shareholders are not keen to sell,” said Yash Ashar, partner and head (capital markets) at Cyril Amarchand Mangaldas.
He went on to say that the changes are primarily in response to several IPOs scheduled for 2021. “These proposed legal changes may have a long-term impact. Issuers planning to list on Indian stock exchanges may be impacted by these changes “he added.