With Paytm’s board of directors reportedly approving a plan to sell exceptional shares north of Rs 22,000 crore, the IPO market is slated for big days as more than a dozen players financial services, including fintechs, are expected to pay off over Rs 55,000 crore this fiscal year. market, according to investment bankers.
With more than ten players in insurance, asset management, commercial and non-banking banking, microfinance, housing finance and payment banks already submitting draft documents with market regulator Sebi for public offerings, the financial services sector is expected to dominate major issues or initial public offerings (IPOs) over the coming months.
Among those who have already filed the draft red herring prospectus (DRHP) with Sebi include Aadhar Housing Finance (Rs 7,500 crore), Policy Bazaar (Rs 4,000 crore), Aptus Housing Finance (Rs 3,000 crore) ), Star Health Insurance (Rs 2,000 crore), Aditya Birla Sun Life AMC (Rs 1,500 to 2,000 crore) Arohan Financial Services (Rs 1,800 crore), Fusion Microfinance (Rs 1,700 crore), Fincare Small Finance Bank ( Rs 1,330 crore), Tamilnad Mercantile Bank (Rs 1,000 – 1,300 crore), Medi Assist (Rs 840 crore) and Jana Small Finance Bank (Rs 700 crore), among others.
And the board of directors of the largest payment bank Paytm has reportedly authorized an IPO of more than Rs 22,000 crore. Together, these financial services companies are expected to raise around Rs 55,000 crore from the public.
If it does materialize, the Paytm issue will be the largest IPO ever in the country, eclipsing the largest issue so far – the government’s sale of Rs 15,000 crore shares in the national mining company Coal India in October 2010, according to investment bankers seeking not to be listed.
Investment bankers and analysts see the IPO boom as a reflection of the ongoing uptrend and therefore advise retail investors to be careful when placing money in new businesses.
VK Vijayakumar, chief investment strategist at Geojit Financial Services in Kochi, said that the performance of the IPO market generally has a strong correlation with the performance of the secondary market.
âIf the stock market is bullish, it attracts a lot of investors to IPOs. In particular, new investors attracted by high potential profits are attracted to new offerings and the IPO market has always performed well during market booms, Vijayakumar told PTI.
Rupen Rajguru, head of equity investments and strategy at global wealth management firm Julius Baer in Mumbai, agrees and cautions retail investors to study valuations very carefully before investing as the market is currently overheated. âThe current dynamism of the IPO market should continue over the next few quarters. The IPOs actually play on the theme of the financialization of savings, which is a big structural change in the country, âRajguru told PTI.
He said Julius Baer globally is “optimistic about India because it sees it as one of the preferred emerging markets after China.”
While claiming that the current bull market provides a favorable environment for IPOs, Vijayakumar also cautioned retail investors to be cautious when applying for an IPO, as some of the recent IPOs have been listed at a whopping 30-40% discount below the problem. the price. Kalyan Jewelers and Suryoday Small Finance Bank are even now offering a discount off the issue price, he said.
âPromoters and baker traders have a responsibility to price the issue in a reasonable way to leave something on the table for retail investors. Aggressive prices will hurt everyone, âwarned Vijayakumar.
Emphasizing that even good issues will be affected by an unfavorable market, he said that with the markets currently being overvalued, there is a possibility of a sharp correction. If IPOs are to be successful even in difficult market conditions, the price must be right, he said.
In addition to traditional financial services players, several digital payment and financial technology players are also planning to tap into the IPO market. The board of directors of Paytm, major in digital payments, has approved a proposal to raise more than Rs 22,000 crore from the IPO, while online insurance platform Policy Bazaar seeks also to launch an offer of 4,000 crore rupees, industry sources said.
Two small financial banks – Jana SFB and Fincare SFB – have also filed their draft documents with the market surveillance body. While Fincare plans to mop up Rs 1,330 crore through a public offering, Jana is looking to raise around Rs 700 crore.
Aditya Birla Sun Life AMC, the largest non-bank sponsored AMC, is seeking to go public with an offer of Rs 1,500-2,000 crore. With an AUM of Rs 2.7 lakh crore, it is among the top five asset managers and will become the fourth AMC to be traded on national stock exchanges.
In the insurance industry, there are two IPOs Westbridge Capital and billionaire investor Rakesh Jhunjhunwala, backed by Star Health & Allied Insurance, and the largest Bengaluru-based health benefits administrator, Medi Assist TPA. Medi Assist filed IPO documents last month to raise around Rs 840 crore and this will be the first IPO by an insurance TPA (third party administrator), while Star Health firms up a problem of Rs 2,000 crore.
Blackstone-backed private equity firm Aadhar Housing Finance and Chennai-based Aptus Housing Finance are also seeking to raise Rs 7,500 crore and Rs 3,000 crore respectively through IPOs. Microfinance players like Arohan Financial Services, Fusion Microfinance and the digital debt platform Northern Arc are also looking to enter the IPO market.
Tamilnad Mercantile Bank, the older generation private sector lender based in southern Tamil Nadu, is also planning a Rs 1,000 crore issue before the end of the calendar year, sources said.