The positive market sentiment post the Budget is expected to see flurry of activity in the IPO market in 2016 as there are 20 companies that have already secured Sebi's approval to raise Rs 7,315 crore
The Sensex's four-day post-budget rally, which was its best week in four years, has revived the prospects for the Initial Public Offering (IPO) market.
The IPO market is expected to see a flurry of activity in 2016 -- there are 20 companies that have already secured Sebi's approval to raise Rs 7,315 crore, with 11 still on the wait-list to mop up Rs 5,445 crore, Prime Database Managing Director Pranav Haldea had said.
Many companies that had their IPO plans on hold are now looking to go forward with their launch. Some of these companies include Healthcare Global Enterprises Ltd (HCG), GVR Infra Projects Ltd and Centre For Sight Ltd, according to a report by Mint.
As many as nine firms, including Ujjivan Financial Services and Equitas Holding, have received markets regulator Securities and Exchange Board of India (Sebi's) approval on Sunday, in the first two months of 2016, to launch their IPOs to fund business expansion and meet working capital requirements.
New Delhi Centre for Sight, Thyrocare Technologies, Nihilent Techonologies, GVR Infra Projects, Mahanagar Gas, GNA Axles and Maini Precision Products too, have received a green signal from Sebi to float their respective initial share-sale programmes, according to data compiled by Prime Database. Together, these companies are expected to raise at least Rs 3,315 crore.
Post-budget boost for IPO plans
Very few firms had entered the market with IPO plans till after the Budget 2016 announcement on February 29. Till then, the Sensex had declined by 11.4% from the start of the year.
So far this year, three companies have raised only about Rs 1,285 crore. However, post the announcement of the budget, the Sensex had surged by 7%.
HCG is expected to be the first to launch its IPO and looks to sell shares worth Rs 600-700 crore in the week beginning March 14, said the report.
In March, GVR and Centre for Sight also plan to launch their IPOs.
GVR Infra looks to sell shares worth Rs 400 crore to investors, while Centre For Sight plans to raise around Rs 300 crore from its IPO, said the report.
Besides, many more filings are expected in the near future, Haldea said.
Haldea said that most companies have been waiting for months for the market to improve. He added that as market conditions have improved, companies which were holding approvals would like to now look at launching their IPOs.
He added that companies typically do not launch their IPOs before the budget because of the uncertainty involved. With market sentiments improving, companies would look to take advantage of the opportunity.
A person involved in one of the IPOs was quoted in the Mint report saying that he/she was not very comfortable with the markets in the last two months. However, they are now looking to launch a couple of deals in the near term. The person added that they did not want to announce IPOs just for listing, it has to trade as high as possible too.
Going ahead, many companies are expected to come out with their IPO either in March or latest by April.
Some of them include IT services firm L&T Infotech Ltd, dairy firm Parag Milk Foods Ltd, manufacturing company Maini Precision Products Ltd and e-commerce firm Infibeam Inc, said the report.
Quantum AMC Director I V Subramaniam said, "IPO market will depend on the equity markets scenario. Besides, pricing will play a crucial role."
Since the beginning of 2016, four companies -- HPL Electric & Power, Dilip Buildcon, Quess Corp and Advanced Enzyme Technologies -- have approached Sebi to float their IPOs, while three firms -- Quick Heal Technologies, TeamLease Services and Precision Camshafts -- have already hit the Dalal Street.
Sebi gives approval for IPOs
While Sebi gave nine companies the nod for the launch of their IPOs. In total nearly 27 firms have received an approval from Sebi for the launch of an IPO. However, many have yet to go ahead with it.
These firms together plan to raise around $2 billion (about Rs 12,700 crore) through the sale of their shares, according to the report.
Data from Prime Database reveal that in 2015, 21 companies had raised Rs 13,614 crore through the launch of their IPOs.
The draft IPO papers filed by HCG said that the company will utilise the funds to be raised through the issue for the purchase of medical equipment, investment in IT software, services and hardware and payment of debt. Its equity investors which include India Build-Out Fund LP, Premji Invest and Temasek Holdings Pvt Ltd will pare their stakes with the issue of IPO.
IDFC Private Equity will also look to pare its 12.3% of its stake in GVR infra. It had invested Rs 150 crore in GVR Infra in 2012.
IPO launches in the past
In 2015, there were as many as 20 main-board IPOs, which together pocketed about Rs 15,000 crore, making it the best period in the past few years in terms of fund-raising through such plans.
In comparison, six IPOs had hit the market in 2014 and garnered just Rs 1,261 crore, while three firms had launched their public issues in 2013 to mobilise Rs 1,284 crore.
Individually, Ujjivan's IPO comprises of a fresh issue of equity shares worth up to Rs 650 crore and an offer for sale of up to 2,49,68,332 scrips by the existing shareholders.
Last month, Ujjivan had raised Rs 300 crore from a clutch of investors in a pre-IPO placement. Since the pre-IPO placement is completed, the number of equity shares issued will be reduced from the fresh issue, subject to regulatory requirements, the company had said.
Equitas Holding's IPO consists of fresh issue of shares to the tune of Rs 600 crore and an equal amount by selling shares to existing shareholders, according to a source.
(With agency inputs)
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