IPO frenzy will continue in October-November, 30 companies seek to mop 45,000 cr: report

Of the total fundraising, a large portion would be raised by tech-driven companies.

The successful IPO of food delivery company Zomato, which has been massively underwritten more than 38 times, has encouraged new-age tech companies to make their major share sales.

Historically, companies like Zomato have raised funds from private equity players and the IPO has opened up a new source of funding for new era tech companies, said Jyoti Roy, assistant vice president ( equity strategist) of Angel One.

Companies expected to raise funds through their October-November IPOs include Policybazaar ( ??6,017 crore), Emcure Pharmaceuticals ( ??4,500 crore) Nykaa ( ??4000 crore), CMS Info Systems ( ??2,000 crore), MobiKwik Systems ( ??1,900 crore), according to merchant bank sources.

In addition, the Capital of the North Arc ( ??1,800 crores), Ixigo ( ??1600 crore), Sapphire Foods ( ??1,500 crore), Fincare Small Finance Bank ( ??1330 crore), Sterlite Power ( ??1,250 crore) RateGain Travel Technologies ( ??1,200 crore) and Supriya Lifescience ( ??1,200 crore) may launch their IPOs during the period under review, they added.

Angel One’s Roy attributed the impressive pipeline of IPOs over the coming month to several factors, including a stronger than expected recovery in the economy after Wave 2, continued REITs and domestic flows on markets and an increase in the participation of retailers in the stock market. over the past year.

Going forward, the IPO boom is expected to continue into the coming year if the current market situation remains constant or does not change much, said Kaushlendra Singh Sengar, Founder and CEO of INVEST19 .

Making a similar statement, Nikhil Kamath, co-founder of True Beacon and Zerodha, said that if the bull run continues for the next 1-2 years, the IPO rush will continue. In addition, the technology sector is expected to remain a major market driver.

So far in 2021, as many as 40 companies have launched their IPOs to increase ??64,217 crores. In addition, Aditya Birla Sun Life AMC will launch its ??Initial sale of shares of 2,778 crore on September 29.

Apart from these, PowerGrid InvIT, the Infrastructure Investment Trust (InvIT) sponsored by Power Grid Corporation of India, has cleaned up ??7,735 crore through its IPO and Brookfield India Real Estate Trust raised ??3,800 crore through its initial stock sale.

It was much higher than ??26,611 crore raised by 15 companies through initial share sales throughout 2020.

Such impressive fundraising via IPOs was last seen in 2017 when companies rallied ??67,147 crores through 36 sales of initial shares.

According to Kamath, IPOs are heavily dependent on market cycles and the IPO exuberance that has been seen over the past 18 months is a function of the current bull cycle. Companies seek to take advantage of investor sentiment.

“The market is reaching new highs and the strong backlash we are seeing in the primary market is pushing companies that were sitting on the fences to take advantage of the buoyant market,” said Vikas Singhania, CEO of TradeSmart.

He further said that companies are raising funds for growth capital or inorganic growth opportunities in the future.

Most IPOs are offers to sell (OFS), where the private equity players or the promoter wish to cash in part of their stake.

“Today, the whole IPO process is attracting a lot of attention for those companies which are acting as an indirect promotion,” Kamath said.

The first sales of shares receive huge demands from investors and the IPOs have been underwritten several times. This has prompted companies to raise funds through IPOs.

The first sales of shares of nearly a dozen companies, including Paras Defense and Space Technologies, MTAR Technologies, Easy Trip Planners, Devyani International, Rolex Rings, Tatva Chintan Pharma Chem and Nazara Technologies, have been subscribed more than 100 times .

Interestingly, the current calendar year has seen most IPOs open with a premium over the issue price, suggesting a strong investor appetite.

Laxmi Organic Industries, MTAR Technologies, Easy Trip Planners, GR Infraprojects, Clean Science and Technology, Macrotech Developers and Ami Organics which were listed this year are trading above their issue price, offering smart returns from the around 110 to 320%, from listing, to investors.

Sengar of INVEST19 said that with the current favorable interest rate scenario and high liquidity, financial institutions are offering IPO finance products at lower rates. Falling funding costs will continue to support the IPO boom.

Additionally, the PSU divestment will be a blockbuster to support the current IPO boom. LIC’s listing is expected to take place in 2021-2022, which will be one of the largest IPOs in Indian market history. This will contribute to the current dynamics of the IPO market for 2022, he added.

Earlier this month, Sebi Chairman Ajay Tyagi said growth-oriented tech companies have increased ??15,000 crore from sales of initial shares over the past 18 months and IPOs valued at approximately ??30,000 crore by such companies are in the works.

“The growing number of unicorns in the startup ecosystem is a testament to the maturing of new age tech companies in our economy. These companies often follow a unique business model focused more on rapid growth than profitability. immediate, “he said.

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