Companies dust off their IPO plans as markets soar
More than half a dozen companies that had filed share sale documents but abandoned the plans midway are taking another shot at going public, feeding off the extraordinary response to initial public offerings (IPOs) after several blistering stock debuts
More than half a dozen companies that had filed share sale documents but abandoned the plans midway are taking another shot at going public, feeding off the extraordinary response to initial public offerings (IPOs) after several blistering stock debuts.
Real estate developer Macrotech Developers (Lodha), gaming firm Nazara Technologies, auto parts maker Craftsman Automation, logistics firm Seven Island Shipping are among companies that have either refiled draft share sale documents or plan to do so soon. Some such as Mrs Bectors Foods have already gone public in their second attempt. For Lodha, this will be its third attempt at going public, having first filed draft documents in 2009.
Most of these companies had previously filed draft IPO papers in 2017 or 2018, but a depressed IPO market forced them to shelve their plans. The covid-19 crisis prolonged their wait. But the huge rally in stock prices that started last year has prompted many of them to re-evaluate plans.
The mad dash for the public markets is also fuelled by the surge in foreign capital inflows. Stunning gains on market debuts have lured millions of retail investors and their institutional counterparts alike.
In 2021, seven companies launched IPOs, with most of them drawing strong investor interest. There are multiple factors driving the IPO activity right now, said Arka Mookerjee, a partner at law firm JSA.
“First is a favourable budget, which has not tinkered with taxes and has given a boost to certain sectors. Second is the liquidity in the market. Fundamentally strong companies want to expand, and so they have capex requirements. The fourth driving factor is to give a favourable exit to private equity shareholders,” Mookerjee said.
Pranav Haldea, managing director of Prime Database group, said the current buoyancy in the secondary markets and strong liquidity flows have created a lot of interest in IPOs and thus companies are viewing this as a good opportunity to launch their public offers.
“IPO is a once-in-a-lifetime event for a company. And thus, they want to see a good secondary market, rich valuations before they go ahead,” said Haldea, adding that phases of weak economic and market performance have seen firms shelve IPOs.
“If tomorrow there is a negative event, you will find that the pipeline that has been building up in recent months will disappear,” Haldea added.
According to Prime Database, 27 firms hold approval for IPOs from the markets regulator, while nine have filed the draft prospectus and are awaiting approval.
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