Securities and Exchange Board of India (Sebi) chairman Ajay Tyagi on Tuesday expressed concern over the slow pace of initial public offerings (IPOs) hitting the market this year and asked investment bankers to play a key role on the pricing front to draw investors.
The regulator has given its go-ahead to about 70 companies to raise over Rs 60,000 crore so far this calendar year, but many of them are yet to enter the primary market, Tyagi said.
Till the end of September, 25 companies raised Rs 30,959 crore through IPOs. Since September 2018, no company has been listed in the main board IPO, which requires a minimum post paid up capital of Rs 10 crore. In the previous calendar year, the IPO market had recorded an all-time high fresh fund-raising of Rs 67,147.4 crore by over 120 companies, according to data from Prime Database.
The minimum post paid up capital to get listed in the main board IPO is Rs 10 crore, while for the NSE Emerge, it is Rs 25 crore.
When asked if the recent halt in the main board IPO is because of pricing, Tyagi said, “merchant bankers have a role to see that IPO issuance is reasonably priced and is acceptable to both issuers and investors.” Addressing an investment bankers’ summit, Tyagi said companies are waiting for the markets to get better.
“Globally also if you see October month has been worse. In fact, for developed markets like the US, it was the worst market scenario in the last 2-4 years. It is now for the issuers and investors to take a call whether it is the right time to raise money,” he said.
Prithvi Haldea, founder chairman of Prime Database and an advisor to Association of Investment Bankers of India (AIBI), during an interaction with Tyagi at AIBI summit, said the pricing expectations of the issuers are still higher than what domestic institutional investors are prepared to give.
When compared to the main board IPOs, the SME (small and medium enterprises) segment has performed better as the amount of money raised has almost doubled this year compared to the previous year. The SME IPO platform has taken off, saying this fiscal has already seen Rs 1,500 crore being raised as against Rs 800 crore in the previous year, Tyagi said.