The primary market is heading for a busy time after a month-long hiatus with five companies comprising policybazaar parent PB Fintech and Paytm parent One97 Communications queuing their initial public offerings (IPOs) in the first half of November.
The firms will raise over Rs 27,000 crore collectively. The other three companies whose IPOs are ready to open include decorative aesthetics supplier SJS Enterprises, Sapphire Foods India, which operates KFC and Pizza Hut outlets, and microcrystalline cellulose manufacturer Sigachi Industries.
The initial share sales of FSN E-Commerce Ventures Limited, the parent company of online beauty and lifestyle products aggregator Nykaa and Fino Payments Bank are presently open for public subscription.
The three-day initial share-sales of Nykaa and Fino Payments Bank will conclude on November 1 and November 2, respectively.
Nykaa is looking to raise Rs 5,352 crore through its IPO, while fintech firm Fino Payments Bank is seeking to mobile Rs 1,200 crore through the initial share sale. Together, these seven companies will raise nearly Rs 33,500 crore through initial share sales. Of these, a major chunk will be garnered by technology-based companies.
Prior to these, Aditya Birla Sun Life AMC had floated its Rs 2,778-crore in initial share sale on September 29. "Bull markets are the best times when any company going public seems to get better premiums and valuations on the business," Prateek Singh, Founder and CEO, LearnApp.com told PTI.
"Tech companies, in particular, get a better premium because of their ability to scale exponentially, which is why we are seeing many tech startups raise cash by going for an IPO this time," he said.
He, further, said that the trend of technology-based companies going public to continue in the immediate future until the market calms down and moves downward. So if the markets fall in the future, the IPOs will also reduce.
So far in 2021, as many as 41 companies have floated their IPOs to raise Rs 66,915 crore and Devina Mehra of First Global said the year should be closing with Rs 1 lakh crore primary market fundraise.
Apart from these, PowerGrid InvIT, the infrastructure investment trust (InvIT) sponsored by the Power Grid Corporation of India mopped up Rs 7,735 crore through its IPO and Brookfield India Real Estate Trust raised Rs 3,800 crore via its initial share sale.
The fundraising so far in this year is way higher than Rs 26,611 crore collected by 15 companies through initial share-sales in the entire 2020.
Such impressive fundraising through IPOs was last seen in 2017 when firms mobilised Rs 67,147 crore through 36 initial share sales.
Mehra, founder, First Global and Smallcase portfolio manager, said, "Anytime any route for raising funds is available, everyone jumps in till it is at the stage of a frenzy. We have seen that happen several times in the past in the IPO market as well - happens every few years. The IPOs will keep coming till the market remains favourable."
She also advised investors to remain cautious. "Just because an IPO is a very fancied one or is very heavily oversubscribed doesn't mean that it will do well in the coming years. Many fancied consumer tech IPOs globally like Uber, Lyft etc have not done well in the aftermarket," she added.
Digital firm One97 Communications, which operates under the Paytm brand name, is set to come out with it Rs 18,300-crore IPO on November 8.
The IPO comprises fresh issuance of equity shares worth Rs 8,300 crore and Rs 10,000 crore from the offer for sale (OFS) by existing shareholders.
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The company has fixed a price band of Rs 2,080-2,150 apiece, which implies that the firm's valuation stands at Rs 1.44 lakh crore-Rs 1.48 lakh crore.
"The biggest merit for Paytm's IPO would be that they have so much more diversified regulatory access under one roof. This focus on diversification means that none of their particular business books has depth unlike other major players who focus more on specialising," Nikhil Kamath, Co-founder, True Beacon and Zerodha, said.
The Rs 5,710-crore IPO of PB Fintech, which operates online insurance platform Policybazaar and credit comparison portal Paisabazaar, comprises a fresh issue of Rs 3,750 crore worth of equity shares and an offer for sale of about Rs 1,960 crore by existing shareholders.
The issue, with a price band of Rs 940-980 a share, will open for public subscription during November 1-3.
The initial share sale of Sapphire Foods India will open for public subscription on November 9 and conclude on November 11. The IPO will be entirely an offer of sale of 1,75,69,941 equity shares by promoters and existing shareholders.
According to market sources, the IPO is expected to fetch Rs 1,500-2,000 crore. SJS Enterprises' Rs 800-crore IPO is entirely an offer for the sale of shares worth Rs 710 crore by Evergraph Holdings Pte Ltd and shares to the tune of Rs 90 crore by KA Joseph.
The issue, with a price band of Rs 531-542 a share, will open on November 1 and conclude on November 3.
Sigachi Industries will issue 76.95 lakh equity shares through IPO and is planning to mop up Rs 125.43 crore at the upper end of the price band of Rs 161-163 per share.
Going ahead, Mehra said that the new economy companies like e-commerce, fintech, and technology startups are the ones that will lead the next round of capital coming into the economy and we are seeing the start of that boom with the IPOs lined up.
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