Diversity makes the cut in offering game

Tania Kishore Jaleel Mumbai | Updated on November 10, 2017

A man carying IPO forms near the Bombay Stock Exchange in Mumbai. (file photo) - Photo: PAUL NORONHA   -  Business Line

Unusual and diverse entities are set to tap the capital markets this year, as was the case in 2010 too.

This Tuesday, beauty salon chain Jawed Habib Hair and Beauty filed its offer document with SEBI for an initial public offering worth Rs 60 crore.

“We are talking to companies in new sectors who are evaluating their fund-raising plans. Indian companies have a strong appetite to grow and their fund-raising needs continue to be as robust as ever. The primary market is expected to remain robust in the medium term,” said Mr V. Jaya Sankar, Executive Director and Head of ECM, Kotak Investment Banking.

Loveable Lingerie (lingerie), Olympia Cards (invitation cards), VRL Logistics (transport service), Lokmat Media (publisher of Marathi daily, Lokmat), Reid and Taylor India (textile maker and retailer), and jewellery brands such as Joyalukkas India and Tribhovandas Bhimji Zaveri are some of the companies that have filed their draft red herring prospectus (DRHP) with the SEBI in the last three months.

In 2010 a record Rs 70,634 crore was raised through 73 initial offerings and follow-on offers. Last year companies such as Bajaj Corp (hair care products), Career Point Infosystems (coaching institute), Eros International Media (media and entertainment), Talwalkars (gymnasium), 123 Greetings (online greeting cards).

DQ Entertainment (animation and gaming), Tara Health Foods (cattle feed and edible oil maker) and Ravi Kumar Distilleries (Indian-made foreign liquor) tapped the capital markets.

Robust but choppy

SMC Capital said there are 100 public issues in the pipeline, on the basis of the DRHPs filed with SEBI, of an indicative size of about Rs 50,000 crore. And this takes into account the private sector alone.

Government-run SAIL, ONGC, IOC and Hindustan Copper are also waiting to hit the capital markets with their issues.

Though the pipeline for this calendar looks “robust”, the market sentiment might play spoilsport for issuing companies.

“There is a huge demand for capital requirement from both the private and public sector companies. Investors are also keen on these companies. If the secondary markets continue to be this choppy, then it might affect these issues,” said Mr Prithvi Haldea, Chairman and Managing Director at Prime Database.

The Sensex has shed more than 13 per cent this year, with FIIs being sellers for more than $1.2 billion. Primary market issuances have slowed down this year, thanks to the choppy secondary markets.

“It looks rather unlikely that we will see the kind of fund raising that was seen last year. We will have to wait and see, maybe after the Budget, to see what call the issuing companies would take on timing the markets,” said Mr Brijesh Koshal, Managing Director-Investment Banking at Daiwa Capital Markets India.

In January there were only three primary market issuances, and they mopped up Rs 3,693 crore; they included Tata Steel's Rs 3,500-crore FPO.

Published on February 02, 2011

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