Home / Market / Stock-market-news /  IPOs seen raising up to Rs2,000 crore in March

Mumbai: At least five companies are seeking to raise up to 2,000 crore through initial public offerings (IPOs) this month, close on the heels of finance minister Arun Jaitley’s first full budget, testing investor appetite for new share sales after a tepid 2014.

The March sales exceed the primary market issuances in all of the last calendar year, when five companies raised a combined 1,201 crore through IPOs—the lowest in more than a decade.

“Indian equities have done very well in last one year. Primary market typically picks up with 5-6 months lag. Indian markets have not witnessed big IPOs in last 4-5 years," said Vikas Khemani, president and chief executive at Edelweiss Securities Ltd.

“There are several scaled up companies backed by PE (private equity) investors ready to hit the market. As these investors need liquidity, they will hit the market soon," Khemani added.

The benchmark BSE Sensex rose almost 30% in 2014, with institutional and retail investor interest in the market picking up on expectations of higher economic growth and a rebound in corporate earnings in the coming years. This, in turn, seems to have revived the IPO market.

The government of Prime Minister Narendra Modi, which assumed office in May last year, has promised to boost investment and reinforce the country’s deficient infrastructure—a commitment it reaffirmed in the budget for 2015-16 presented by Jaitley on Saturday.

Companies that have already set IPO launch dates for this month include regional cable television service provider Ortel Communications Ltd and Adlabs Entertainment Ltd, which runs an amusement park in Mumbai.

Ortel’s IPO opens on 3 March with the company looking to raise about 240 crore. The Adlabs IPO will open for subscription on 10 March and is expected to raise about 450 crore.

In a statement on Monday, Adlabs Entertainment said that the IPO funds would be used to partly repay loans of 330 crore.

Ortel plans to use the IPO funds on network expansion, expansion of digital cable and broadband services, the company said.

The three other companies that plan to hit the market this month are Power Mech Projects Ltd, PNC Infratech Ltd and MEP Infrastructure Developers Ltd.

“We are still awaiting the approval from Sebi (Securities and Exchange Board of India). Depending on when we get the approval, we will look at launching the issue by the end of March or latest by first week of April," said S. Kishore Babu, chairman and managing director at Power Mech Projects.

The company is looking to raise anywhere around 350-400 crore, he said, adding that the funds will be used partly for working capital requirements and financing purchases of equipment. Existing investor Motilal Oswal Private Equity will be making a partial exit through the IPO, Babu added.

MEP Infrastructure Developers, a public works developer and toll manager that received approval for the IPO from the Securities and Exchange Board of India (Sebi) in December, is looking to raise 360-400 crore.

“We are working out the dates with our investment bankers, but we would like to launch the issue within the month of March," said Jayant Mhaiskar, vice-chairman and managing director of MEP Infrastructure.

According to the company’s prospectus, filed with the markets regulator, the company plans to use the IPO funds for repayment of loans to the tune of 291.2 crore availed of by its subsidiary and for general corporate purposes.

Agra-based PNC Infratech, too, is planning to launch its IPO in March, said two people familiar with the development. “It is looking at launching the issue by the last week of March or early April, and will be raising 450-500 crore," said one of the two.

The firm declined to comment for the story.

The last time the primary market saw such activity was in 2011. In terms of the number of IPOs, in September 2011, nine IPOs hit the market to raise 622.77 crore, according to data from Prime Database, which tracks market activity.

In terms of money raised, the last time more than 2,000 crore was raised in a month through IPOs was in December 2012, when Bharti Infratel Ltd 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.

Sebi has granted approvals to a number of IPOs in recent months.

In February, the market regulator approved five IPOs—by Uniparts India Ltd, VRL Logistics Ltd, PNC Infratech Ltd, ACB (India) Ltd and Shree Pushkar Chemicals and Fertilizers Ltd. Several other firms such as Inox Wind and UFO Moviez, too, have received Sebi approval but haven’t yet announced plans for the launch of their IPOs.

Apart from IPOs, several companies have approvals in place for qualified institutional placements, and the government may launch some offers for sale of public sector undertakings. State Bank of India, too, is planning to raise up to 15,000 crore through a follow-on public offer in the near future.

“Inadequate supply of good quality paper is one of the key reasons why some of the sectors in public markets are trading very expensive. I believe there will be demand for any good quality paper if it is reasonably priced," said Khemani of Edelweiss.

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