Lacklustre IPO scene may be a thing of the past

LacklustreMydigitalfc.com, With buoyancy in the equity market, the primary market is likely to see action in coming days. Companies across sectors are gearing up for their initial public offerings (IPOs) in the current financial year or in the later part of calendar year 2015.

The primary market has been quite dull, with just a few successful listings like Just Dial and Wonderla Holidays so far in 2013 and 2014.

The last firm to list on the stock market — Wonderla Holidays — has done well after receiving good response during the IPO and appreciating by 73 per cent so far after listing on May 9. With the secondary market appreciating by more than 20 per cent in 2014 so far, primary market revival now looks quite a possibility.

Globally too some big IPOs have either already listed or are going to hit the market soon. China-based Alibaba, the largest e-commerce player in the world with total gross merchandise volumes on its platforms exceeding $248 billion in 2013, is all set for its IPO that may be launched by second half of August or early September. By August-end and in September there is going to be rapid filing of prospectuses by prospective companies, with companies ready with their last six months’ financials, said a merchant banker.

This year the filing so far is far better compared with last year, market sources said. Currently draft red herring prospectus from Lavasa Corporat­ion, Adlabs Entertainment, Monte Carlo Fashions, Sharda Cropchem are at various stages of scrutiny at Sebi as per data released by Sebi on July 25.

Sebi scrutiny and observations before going to the primary market are essential and are equivalent to the market regulator’s approval for the company looking to raise capital from the primary market.

According to Prime Database, are eight companies which have received final Sebi approval are still eligible for the IPO process: Advanced Enzyme Technologies, Great Eastern Energy Corporation, Inox Wind, Intas Pharmaceuticals, Jyoti CNC Automation, NCML Industries, Shemaroo Entertainme­nt and Snowman Logistics.

Smaller companies looking to raise less than Rs 100 crore have also been queuing up at BSE’s SME platform for listing.

Ashish Kumar Chauhan, MD & CEO, BSE said, “About 15 companies falling in the small and medium enterprises category have filed their prospectus for listing on BSE’s SME platform.”

BSE has been getting good response on its SME platform due to higher ticket size of investors of Rs 1 lakh and above and much smaller capital raising by these companies compared to the main board of BSE & NSE, experts said.

So far 63 companies have got listed on BSE’s SME platform since its launch in 2012. Also, there are several firms that have been planning for their IPOs and may file their draft red herring prospectuses with Sebi any time now. Among the possible IPO candidates are Hindustan Aerona­utics, it has already received the nod from the Cabinet Committee of Economic Affairs in November 2012 for offloading 10 per cent stake, when the UPA government was in power.

It is learnt that department of disinvestment is working on launching the equity sale of HAL in the second half of FY15. This will be the first IPO of a state-owned firm after a gap of at least two-and-a-half years. The government has already appointed four merchant bankers — SBI Capital Markets, Goldman Sachs, Barclays and Axis Capital — for managing the HAL stake sale.

India’s oldest mutual fund, UTI Mutual Fund, is also a possible IPO candidate. UTI Mutual Fund’s IPO plans floated in 2007 were later shelved due to the global financial crisis. Sebi is keen on UTI Mutual Fund’s listing as Sebi chairman U K Sinha had some time back said that UTI can’t continue to have shareholders which also have their own mutual funds. State Bank of India, Life Insurance Corporation, Bank of Baroda and Punjab National Bank all have their own mutual funds.

In the reaty space, Lodha Developers is also a possible candidate. The firm had shelved its plan in 2008 after market conditions turned unfavourable for real estate firms due to the global financial crisis.

In the aviation sector, Indigo is also gearing up for an IPO. The airline is the only profitable airline in India. While others like Jet Airways, Spicejet and Kingfisher Airlines are making losses, there are new players like AirAsia and Singapore Airlines which are in process of launching operations. Diagnostics major Thyrocare Technologi­es may launch its IPO in February 2015. Thyrocare’s private equity investor is likely to exit the company through the IPO route by diluting part of its 27 per cent stake.

In India, e-commerce company Snapdeal may also raise money from the market but it may go for a US listing rather than Indian listing, according to the promoters of the company.

Indiamart, a business-to-business (B2B) e-commerce portal, is also looking to tap the primary market in the next financial year, reports said.

Gujarat government-owned Gujarat State Petroleum Corporation, which had earlier shelved its IPO plan in 2012 due to adverse market conditions, is also a possible candidate this fiscal with the secondary market’s good run so far this year.

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