Companies include Power Mech Projects, Pennar Engineered Building Systems, Navkar Corp and Prabhat Dairy, sources said
Mumbai: At least four companies are preparing to test the waters in the Indian capital market this month, and could collectively raise a little over ₹ 1,700 crore through their initial public offers (IPO).
The four companies are Power Mech Projects Ltd ( ₹ 273 crore), Pennar Engineered Building Systems Ltd ( ₹ 160 crore), Navkar Corp. Ltd ( ₹ 600 crore) and Prabhat Dairy Ltd ( ₹ 700 crore), four people aware of the development said on condition of anonymity.
While Power Mech’s IPO opens on 7 August, others are yet to announce a date. An email questionnaire sent to the companies on Wednesday morning did not elicit any response.
“These firms have been looking to launch their IPOs as they have received Sebi approval for quite some time now, and they have been doing road shows to attract foreign institutional investors to their issuance. In fact eight to nine companies have been doing road shows since last month. As and when the bankers feel that there is a strong commitment for the anchor book and the markets look conducive, they will launch the respective issues," said an investment banker.
Three of the IPOs are that of private equity (PE) backed companies, where PE funds are looking to exit. While Power Mech is backed by Motilal Oswal Private Equity, Prabhat Dairy and Pennar are backed by Rabo Equity Advisor’s India Agribusiness Fund and Zephyr Peacock India, respectively.
While three IPOs raised ₹ 1,568.7 crore in March, three IPOs raised ₹ 1,391.8 crore in April, according to data from primary market information tracker Prime Database. So far this year, nine firms have raised ₹ 4,377.1 crore through IPOs, more than that raised in the previous two years. Also, 24 firms have filed their draft IPO papers so far this year.
The last time the primary market saw such activity in terms of the number of IPOs was in 2011. In September 2011, nine IPOs hit the market to raise ₹ 622.77 crore, according to Prime Database. Also, the last time more than ₹ 2,000 crore was raised in a month through IPOs was in December 2012, when Bharti Infratel Ltd alone raised ₹ 4,172.76 crore. That month also saw two more IPOs by PC Jeweller Ltd, which raised ₹ 601.31 crore, and Credit Analysis and Research Ltd, which raised ₹ 539.98 crore.
“We should see more IPOs in the second half of the year as compared to the first half. Markets by and large have been buoyant. The companies and PE investors who have been waiting patiently, will all want to launch IPOs," said Arun Kejriwal, founder of Kejriwal Research and Investments Services Pvt. Ltd.
However, the only concern is that if there are many good issues in a row, subsequent issues might get overpriced as companies may look to take advantage of the positive sentiment in the market, he said.