10 firms plan to raise ₹20,000cr via IPOs this December
What's the story
The primary market will continue to be strong with at least 10 firms, including Vishal Mega Mart and Blackstone-owned International Gemmological Institute (India) Ltd, looking to raise a combined ₹20,000 crore next month. Others in the pipeline for their initial public offerings (IPOs) include Avanse Financial Services, Sai Life Sciences, Paras Healthcare hospital chain operator, and DAM Capital Advisors. The upcoming IPOs will span across sectors and deal sizes.
Investor confidence
Market sentiment and IPO momentum
Trivesh D, COO of online brokerage house Tradejini, said the Maharashtra election verdict and UP Lok Sabha by-election results have created a positive market sentiment. This could potentially stimulate the IPO activity and fundraising efforts. Despite some recent issues struggling in the secondary market due to pricing challenges during a bull run, Trivesh believes that "with election-related funds returning to the market and the gray market becoming active again, the IPO space has regained some momentum."
Fundraising goals
Companies' objectives for tapping into primary market
The companies are using the primary market to offer an exit route to existing shareholders, raise funds for expansion, retire debt, and meet working capital requirements. Vishal Mega Mart plans to launch a ₹8,000 crore IPO entirely as an offer-for-sale (OFS) of stocks by promoter Samayat Services LLP. The International Gemmological Institute plans to raise ₹4,000 crore through its IPO with a mix of fresh issue and OFS.
Capital strategy
Avanse Financial Services's IPO plans and usage
Avanse Financial Services, backed by Olive Vine Investment Ltd which is an affiliate of private equity major Warburg Pincus, will launch a ₹3,500 crore IPO. This will comprise a fresh issue of equity shares worth up to ₹1,000 crore and an OFS of up to ₹2,500 crore by selling shareholders. The company plans to use the funds to augment its capital base for future needs.
Market entrants
Other companies preparing for IPOs in December
Apart from the aforementioned companies, diagnostic chain Suraksha Diagnostic, packaging equipment maker Mamata Machinery, and Transrail Lighting are also gearing up to launch their respective public issues next month. This year has witnessed a massive jump in funds raised via mainboard, with 75 companies collectively mobilizing around ₹1.3 lakh crore, a huge jump from the ₹49,436 crore raised by 57 firms in 2023.
Future prospects
Anticipated IPOs and market absorption capacity
Saurabh Patwa, Head of Research and Portfolio Manager at Quest Investment Advisors, expects more than 30 IPOs next month. He cautions that this massive pipeline may put pressure on liquidity and the market to absorb them, particularly if foreign investors keep pulling out money. However, IPO investors have reaped huge rewards over the last five fiscal years with an average listing gain of 27% for retail investors and current gains up to 105%.