Aadhar Housing Finance, travel company Ixigo and lender Five Star Business Finance are some of the big issuers planning to approach institutional investors to enter the public markets in mid-October to November, three people aware of the development said are. Together these companies have plans to increase €11,000 crore from their initial share sales.
Show full picture
street signs
The primary market revival comes as the benchmark Nifty broke back above 18,000 for the first time since April this year on Tuesday. The Sensex is also trading above 60,000. Benchmark indices are up around 18% from their June lows.
“Indian markets have performed strongly and that has opened the window for some deals. At the moment we see mainly smaller issuers entering the market. The response to these deals has been encouraging, and as such, other larger companies are now also preparing to see if they can launch their IPOs,” said one of the three above.
Others, such as media outlet Asianet Satellite Communications and auto dealership Landmark Cars, are also likely to launch investor roadshows, said those mentioned above, who work with investment banks.
Emails to Aadhar Housing Finance, Ixigo, Five Star Business Finance, Landmark Cars and Asianet Satellite remained unanswered at the time of writing.
After a two-month hiatus after May, the primary markets have seen three IPOs so far. Syrma SGS Technologies, the first company to enter the market, saw the shares on offer being subscribed 32.6 times. The shares returned 42% in their trading debut. Dreamfolks’ IPO drew 56.7 times and posted an intraday gain of 42%. The third IPO – Tamilnad Mercantile Bank – was subscribed 2.8 times. Another IPO, Harsha Engineers, opens Wednesday.
Continued buying of Indian equities by foreign institutional investors (FIIs) is also encouraging larger issuers to explore initial public offerings.
FIIs have been net buyers of Indian stocks since July after buying them €Data since then shows shares worth 64,000 crore. FIIs were sold in the six months ended June 30th €Indian stocks worth 2 trillion. “We have seen several large block trades over the past few weeks, be it Zomato, Max Healthcare, Sona Comstar and several others where FIIs have shown strong interest in buying large chunks of stock. Such block deals are usually seen as precursors to primary market activity,” said the second person.
Primary market action is also being driven by companies looking to take advantage of the current window before either their Sebi registrations or financials expire. Sebi’s approval for an IPO is valid for 12 months.
According to Sebi norms, financial figures for a given quarter are only valid for 135 days and therefore June financial figures (most recent closed quarter) of companies are only valid until mid-November. If companies do not take advantage of the current market window, there may be a delay in launching the business as they are required to file their prospectus containing September quarter financials, which may take some time to prepare and therefore the time , could the Companies are missing out on the current market window, the second person said.
“For companies whose Sebi registrations expire in November or December, this is a good opportunity to see if they can hit the markets as investor interest in IPOs has returned. We expect a lot of activity in the primary market from mid-October to mid-November,” said the second person.
Certainly, many of these IPO-bound companies need to adjust their plans to reflect the current market reality.
“The reality is that investors are still cautious and therefore valuation expectations must remain subdued. Most companies planning to launch have to do so at lower valuations than they anticipated at the time the IPO papers were filed,” said a third investment banker, also speaking on condition of anonymity.
Get all the business news, market news, breaking news and latest news updates on Live Mint. Download the Mint News app for daily market updates. More less
Subscribe to something Mint newsletter
* Enter a valid email address
* Thank you for subscribing to our newsletter.
Post your comment
Comments are closed.