Notwithstanding the bearish sentiment in the secondary market, it will be raining money in the primary market with four companies lining up to raise ₹24,925 crore next week through an initial public offer.
If one includes Nykaa IPO that closes on Monday, the mop-up would swell to a whopping ₹30,000 crore.
Among the marquee initial offer, Paytm will open on November 8 with a price band of ₹2,080-₹2,150 a share to raise ₹18,300 crore while Policybazaar will tap the market on Monday for ₹5,709 crore funding with an issue price band of ₹940-₹980 a share.
Riding on the market frenzy, decorative aesthetics product company SJS Enterprises and microcrystalline cellulose manufacturer Sigachi Industries will tap the market to raise ₹800 crore and ₹125 crore, respectively.
Interestingly, all these companies have already raised substantial money through anchor investors. For instance, Policybazaar has got ₹2,569 crore from 155 anchor investors including HDFC MF, ICICI Prudential, SBI MF, Axis MF, Aditya Birla Sun Life Trustee, Kotak Mutual Fund, Nippon Life, UTI MF, Franklin MF and DSP MF besides well-known foreign institutional investors.
This apart, insurance companies such as Bajaj Allianz Life Insurance, HDFC Life Insurance, SBI Life Insurance and Max Life Insurance that sell their products through the Policybazaar platform are also betting big on the IPO.
SJS Enterprises has attracted investment of ₹240 crore from 18 anchor investors including Goldman Sachs and Nomura, Axis Mutual Fund, Franklin MF, Aditya Birla Sun Life Insurance, Avendus and Edelweiss. Two anchor investors Nexus Global Opportunities Fund and 3 Sigma Global Fund have invested ₹38 crore in Sigachi Industries.
Kranthi Bathini, Market strategist, WealthMills Securities said the primary issue of these new-age businesses is expected to get a good response despite bearish sentiment in the market. In fact, some of the high net worth had booked profit in the secondary market to invest in these and upcoming IPOs, he said.
‘Caution advised’
However, Bathini said retail investors should be cautious as customers' stickiness to these types of business is yet to be tested in India particularly when these companies switch focus from building a brand to growing the bottomline.
Vijayakumar, Chief Investment Strategist, Geojit Financial Services said these IPOs are expected to get heavily oversubscribed and therefore, there will be a huge drain of money from the secondary to the primary market.
The net sale of ₹13,550 crore by foreign institutional investors in October has been the highest this year with the last eight days of trading saw sustained selling by FIIs due to higher valuations.
The big IPOs will drain much higher than fundraising by the big-ticket IPOs, he added.