As market banishes Covid blues, many companies dust off IPO plans

Our Bureau Mumbai | Updated on September 17, 2020 Published on September 17, 2020

Revival of market for initial float is evident in the massive response that last few issues got

After lacklustre initial public offerings (IPO) last year, hopes of revival has been dashed this year by Covid-19 and its subsequent impact on economy.

Last year, about 16 companies raised about ₹12,000 crore through IPO.

After the initial offer of SBI Cards in the start of this year, there has been a lull in the primary market till July due to the pandemic. Rossari Biotech and Mindspace Business Parks REIT finally decided to hit the market and raised ₹5,000 crore from investors amid good response from retail investors.

Rossari Biotech was subscribed 80 times and surged over 60 per cent on market, while Mindspace REIT, which got subscribed 13 times , was listed with 11 per cent premium.

In September, two more companies -- Happiest Minds Technologies and Route Mobile-- received massive investor response for their IPOs. Happiest Minds got subscribed 151 times, while Route Mobile got subscribed 73 times.

In the last five months, many new investors have opened demat accounts and participated in the IPO as there has been no lucrative IPO since March.

Hemang Jani, Head – Equity Strategy, Broking & Distribution, Motilal Oswal Financial Services, said many companies that have received regulatory approvals have postponed their IPO plans and are waiting for a recovery in the equity market.

With a sharp turnaround in the secondary market, and broader market also participating in the rally, the primary market is reviving, he added.

A host of IPOs-- CAMS, UTI AMC, Angel Broking and Chemcon Speciality Chemicals to name some of them-- are likely to hit the market soon. Kalyan Jewellers, NCDEX, Barbeque Nation, Burger King, Bajaj Energy, Lodha Developers may also launch their IPO this year.

LIC couldjoin the bandwagon later this year and could be one of the largest IPOs ever. The government is looking at offload 25 per cent stake in LIC in tranches, as it is falling short of its divestment target of ₹2.1 lakh crore this fiscal.

LIC is likely to raise about ₹80,000 crore from the IPO. Assuming 35 per cent retail portion, about ₹25,000-28,000 crore would be raised under the retail category which is 2.5 times the retail participation witnessed during Coal India's IPO.

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Published on September 17, 2020
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