Fund-raising via IPOs almost doubles in H1 2018: 18 firms raise Rs 236 bn
"The IPO market is buoyant for good quality company issues which are priced cautiously. There is investor appetite for companies which price their IPOs keeping money-on-table for investors," J Kalyaniwala, vice president of investment banking at Prabhudas Lilladher said
In a blockbuster performance, as many as 18 companies have raised a staggering Rs 236.7 billion through initial public offerings in the first half of this year, almost double from the year-ago period.
Moreover, the outlook appears to be bullish for the remaining part of 2018 as nearly 50 companies, including HDFC Mutual Fund, Lodha Developers and Rail Vikas Nigam are expected to launch their initial share-sale offers in the coming months.
Of these, around 28 firms are awaiting Sebi's nod to launch their public issues, while 18 companies have already secured the regulator's clearance to float initial share-sale offers, as per the latest update available with markets regulator Sebi.
During January-June this year, 18 companies have collectively raised Rs 236.7 billion through their respective IPOs, which is higher than Rs 120 billion garnered by 13 issuers in the first six months of 2017, according to an analysis of data available with the stock exchanges.
In the first half of 2016, 11 initial share-sales offers had garnered Rs 69.62 billion.
Most of the funds that have been raised during the period under review are for business expansion plans, repayment of loans and to support working capital requirements.
Further, many companies have opted the IPO route to give exit to their existing shareholders like private equity and venture capital firms.
By taking the IPO route, companies achieve the benefits of listing the equity shares on the bourses, which enhances their brand name.
The largest IPO was that of Bandhan Bank (Rs 44.73 billion) followed by Hindustan Aeronautics (Rs 42.29 billion), ICICI Securities (Rs 35.15 billion), Varroc Engineering (Rs 19.55 billion), IndoStar Capital Finance (Rs 18.44 billion) and Lemon Tree Hotels (Rs 10.4 billion).
Among others, state-run companies -- Bharat Dynamics, RITES and Midhani --have also taken the IPO route to raise funds as the government intends to unlock the real value of such PSUs and bring in greater accountability.
"The IPO market is buoyant for good quality company issues which are priced cautiously. There is investor appetite for companies which price their IPOs keeping money-on-table for investors," J Kalyaniwala, vice president of investment banking at Prabhudas Lilladher said.
Experts said that proactive regulatory environment coupled with uplifted investor sentiment has helped the IPO market.
Further, Sebi, in its board meeting last month, had decided to reduce the timeline for announcement of initial share-sale price band, which is further going to aid the IPO market.
Under the new rules, the timeline for announcing price band for initial share-sale offer will be reduced to two days from the current five days.