The Indian market is set to witness a deluge of initial public offerings (IPOs) if regulatory filings are anything to go by. In the past three weeks, around a dozen companies have filed offer documents with market regulator Securities and Exchange Board of India (Sebi) to launch public offerings. These companies come from varied sectors, including banking, logistics, media and even infrastructure.
Investment bankers say the IPO market is set to come to life in a big way in the coming months and the momentum could continue well into the year if the secondary market continues to remain supportive. “I feel optimistic about the primary market. Looking at information on the basis of filings with the regulator recently, my judgement is that IPOs worth Rs 20,000 crore or thereabouts could hit the market over the next 12-15 months,” says S Ramesh, joint managing director and member of the board, Kotak Investment Banking.
The rise in the stock market, a turnaround in the economy and a favourable outlook for the next few years have provided investment banks and issuers much-needed comfort to tap the capital market. Industry players say the IPO process for a host of companies had started around six months back and now they are ready to come to the market. S Subramanian, managing director & head of investment banking, Axis Capital, says they have filed a “bunch of offer documents” and are in the process of filing more. He says IPOs always lag the market due to the long time required to ready first-time issuers.
“When the market was going through a downturn, not many companies bothered to get their IPO documents ready. They didn’t anticipate such a reversal in the market. It takes a lot of time to ready unlisted companies for IPOs,” he said.
Some of the companies that have filed their IPO documents on Monday include private sector lender Catholic Syrian Bank, construction company Dilip Buildcon and regional media company Amar Ujala Publications.
Investment bankers say most of the IPOs in the coming months will largely be from mid-sized companies, while there could be a few big offerings. “Mostly we will see medium-sized IPOs from a diverse set of sectors, including a number of them from the broader consumption theme,” said Ramesh.
On Thursday, around five companies filed their offer documents with Sebi compared to seven filings in the first three months of the year. Investment banking sources said most of these filings were made on the last day of the previous financial year but they reflected on Sebi’s website on April 1.
“There was a scramble to file offer documents with Sebi on March 31. This is because Sebi doesn’t accept documents with financial numbers older than six months. Companies, that file in April will need to update their financial statements,” said a banker asking not to be quoted.
According to sources and media reports, among the major companies that could file offer documents soon include Syngene International, research arm of biotechnology company Biocon, GVK Airport Developers, the airport arm of GVK Power & Infrastructure, and domestic airline IndiGo.
Bankers say the start of 2015-16 is in sharp contrast to the last financial year. “If you see the filings in April 2014, it was the lowest figure in almost a decade,” says Subramanian.
In 2014-15, the Indian market witnessed only eight IPOs, which together raised less than Rs 2,500 crore.