IPOs in 2022: The Dalal Street IPO rush seems far from over as we head into the new year as markets will continue to buzz with new issues appearing every other day. According to reports, the primary markets will remain busy with activity as nearly two dozen companies aim to offer their Initial Public Offerings, or IPOs, in the March 2022 quarter. The IPOs are collectively set to fetch Rs 44,000 crore this quarter, the report says, citing commercial bankers. Last year was an exceptional year and this year will continue.
By 2021, as many as 63 companies had raised a total of a record amount of Rs 1.2 lakh crore through IPOs even during the pandemic. This year’s rush is an answer to that. A large portion of the total funds this year will be raised by technology-driven companies.
Apart from these companies, PowerGrid InvIT (Infrastructure Investment Trust) raised Rs 7,735 crore through its IPO while Brookfield India Real Estate Trust raised Rs 3,800 crore through REIT (Real Estate Investment Trust).
Excessive liquidity, huge stock market gains and increased private investor participation led to continued euphoria in the IPO market in 2021.
The companies expected to raise funds through their IPOs during the March quarter include hotel aggregator OYO (Rs 8,430 crore) and supply chain firm Delhivery (Rs 7,460 crore), the commercial bankers said.
In addition, Adani Wilmar (Rs 4,500 crore), Emcure Pharmaceuticals (Rs 4,000 crore), Vedant Fashions (Rs 2,500 crore), Paradeep Phosphates (Rs 2,200 core), Medanta (Rs 2,000 crore) and Ixigo (Rs 1,800 crore) are expected to first share sales, they added.
Skanray Technologies, Healthium Medtech and Sahajanand Medical Technologies are also likely to release their IPOs during the reporting period, the commercial bankers said.
These companies raise funds for organic and inorganic growth initiatives, debt payments and give exits to existing shareholders.
“The first public listing by the companies is done to raise capital through the public, which increases the liquidity of the stock and helps discover valuations,” said Eklavya, founder of Recur Club.
LearnApp.com founder and CEO Prateek Singh said the tech companies now want to expand globally and they need capital to do so; and this capital is raised through the IPO route.
In addition, anchor investors in these companies have been waiting for an exit to be rewarded, this exit is being offered to the anchor investors through the IPO route, he added.
The continued activity in the primary market comes at a time when Sebi has decided to tighten its IPO rules to address the extreme volatility of stock prices on their listing day.
These measures include limiting the amount of issuance proceeds a company can use for unidentified inorganic growth, as well as limiting the number of shares that can be offered by shareholders for sale and increasing the lock on shares on which is subscribed by anchor investors.
Yash Ashar, Partner and Head (Capital Markets) at Cyril Amarchand Mangaldas, said: “The inability to raise funds for future unidentifiable acquisitions would impact some unicorns’ capital raising plans, particularly where such companies may not use other capital and where existing shareholders are unwilling to sell.”
He added that these changes are mainly a response to several IPOs in 2021.
“These proposed legislative changes could have a long-term impact…These changes could affect plans by issuers that intend to list on Indian exchanges,” he added.
(With PTI inputs)
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