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Wednesday, January 27, 2021

Covid fails to dampen IPO boom: India Inc raises record Rs 1.7 lakh crore

Contrary to the despondency due to the pandemic, 15 main-board IPOs came to the market, collectively raising Rs 26,611 crore.

By: ENS Economic Bureau | Mumbai | Updated: December 29, 2020 4:12:34 am
Two IPOs to hit market this week, eye over Rs 5,800 croreIndian Railway Finance Corporation and Sequoia Capital-backed Indigo Paints -- are set to hit the market with their initial share-sale offers this week to raise an estimated over Rs 5,800 crore. (Representational)

The primary market witnessed an all-time high fund raising of Rs 1,77,468 crore by India Inc in 2020, 116 per cent higher than Rs 82,241 crore mobilised in 2019, despite almost the entire year being overshadowed by the Covid pandemic.

The previous highest amount raised in a calendar year was Rs 1,60,032 crore in 2017. “Strong retail participation in IPOs, huge listing gains and highest-ever amount raised through QIPs and InvITs and ReITs were the key highlights of the year,” said Pranav Haldea, managing director, Prime Database Group.

According to Haldea, the continuing buoyancy in secondary markets as well as the listing performance of IPOs in the last few months have provided impetus to the primary market. The IPO pipeline continues to remain strong with 28 companies holding Sebi approval, wanting to raise nearly Rs 28,706 crore and another seven companies — wanting to raise nearly Rs 4,410 crore — awaiting Sebi’s approval, taking the total mobilisation plan to over Rs 33,000 crore.

Contrary to the despondency due to the pandemic, 15 main-board IPOs came to the market, collectively raising Rs 26,611 crore. This was an increase of 115 per cent from the Rs 12,362 crore raised through 16 IPOs in 2019. The largest IPO in 2020 was from SBI Cards for Rs 10,341 crore. The average deal size was Rs 1,774 crore, it said. Of the 15 IPOs that hit the market, five had a prior PE and VC investment. Offers for sale by such PE and VC investors at Rs 8,026 crore accounted for 30 per cent of the total IPO amount. Offers for sale by promoters at Rs 7,880 crore accounted for a further 30 per cent of the IPO amount, Prime Database said.

According to Haldea, of the 15 IPOs, 13 companies had anchor investors, which collectively subscribed to 29 per cent of the total public issue amount. The domestic institutional investors played a significant role as anchor investors, with their subscription amounting to 13 per cent of the amount. This was, however, lower than the 16 per cent from FPIs, it said.

The overall response from the public to the mainboard IPOs of the year, according to Prime Database.com. Nine IPOs received a mega response of more than 10 times Mazagon Dock at (156 times) followed by Mrs Bectors Food Specialities (138 times), Chemcon Speciality Chemicals (102 times), Burger King (86 times), Happiest Minds Technologies (82 times), Rossari Biotech (55 times), Route Mobile (52 times), Computer Age Management Services (33 times) and SBI Cards (19 times).

As far as retail investors are concerned, the year witnessed tremendous response from them. The highest number of applications was received by SBI Cards at 26.95 lakh followed by Mazagon Dock (23.56 lakh), Mrs Bectors Food Specialities (22.02 lakh), Burger King (19.75 lakh), Chemcon Speciality Chemicals (19.71 lakh), Happiest Minds Technologies (18.62 lakh), Computer Age Management Services (18.57 lakh) and Route Mobile (13.62 lakh).

Explained

Need for caution

With the bull run on the stock markets taking the Sensex to new peaks, the IPO market is again in the spotlight. At a time when companies are lining up to raise funds from the market amid high valuations in the market, investors should be cautious before investing their hard-earned money.

According to Haldea, response to IPOs was further buoyed by strong listing performance of IPOs of the year. Of the 14 IPOs which got listed, 10 gave a return of over 10 per cent (based on closing price on listing date). Burger King gave a stupendous return of 131 per cent followed by Happiest Minds Technologies (123 per cent), Mrs Bectors Food Specialities (107 per cent), Route Mobile (86 per cent), Rossari Biotech (75 per cent), Chemcon Speciality Chemicals (72 per cent), Gland Pharma (21 per cent), Mazagon Dock (19 per cent), Computer Age Management Services (14 per cent) and Likhitha Infrastructure (14 per cent). Moreover, all 14 IPOs (listed thus far) are trading between one and 220 per cent above the issue price (closing price of December 24, 2020). However, activity in the SME segment further declined in 2020 in comparison to 2019.

Markets scale fresh peak

NEW DELHI: Extending gains for the fourth straight session, the Sensex and the Nifty raced to new peaks on Monday, in line with broad-based rally in global equities as investors cheered a $2.3 trillion US stimulus package and last-minute Brexit deal. The Sensex settled up by 380.21 points or 0.81 per cent at its all-time closing high of 47,353.75.

All 3 major US indices opened at record highs. The Dow rose 292.14 points, or 0.97 per cent, to 30,492.01, the S&P 500 gained 33.39 points, or 0.90 per cent, to 3,736.45 and Nasdaq added 70.75 points, or 0.55 per cent, to 12,875.49.

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