Mumbai: Around 30 companies filed their draft initial public offering (IPO) papers with the markets regulator in the last six months, eyeing a revival in the IPO market in 2020, data from the Securities and Exchange Board of India (Sebi) shows.
In Q4 2019, 13 companies filed their draft IPO prospectus with Sebi, while Q3 2019 saw 17 filings. In contrast, the first half of 2019 saw 15 companies file their IPO papers, with and nine filing their papers in Q1 and six in Q2.
The surge in initial share sale filings comes even as 2019 clocked a five-year low fundraising tally for the IPO market.
IPO activity in 2019 saw the lowest fund-raising since 2015, with 16 companies raising around ₹12,365 crore, data from primary market tracker Prime Database and regulatory filings shows. The previous year had seen 24 companies raising ₹30,959 crore through IPOs, data shows.
The lower deal activity in 2019 was largely a result of a liquidity crisis unleashed by defaults by the Infrastructure Leasing and Financial Services (IL&FS) group, an overall slowdown in the Indian economy, and global macro headwinds, such as the US-China trade war. These made investors jittery, prompting them to choose high-quality listed names instead of new names looking to hit the markets.
The rush of IPO filings suggest that companies are optimistic of a turnaround in 2020.
Among the filings in Q4 2019 are a few big names, such as private equity firm Carlyle-backed SBI Cards and Payments Technologies Ltd, the credit card business of India’s largest lender State Bank of India; Mindspace Business Parks REIT, backed by leading developer K Raheja Corp.; and the world’s largest alternative asset manager Blackstone and mutual fund manager UTI Asset Management Co. Ltd (UTI AMC).
The ₹9,600-crore SBI Cards IPO will see both State Bank of India (SBI), the parent entity, and Carlyle, which holds 26% in the unit, pare their stakes by 4% and 10%, respectively.
At an expected enterprise valuation of up to ₹65,000 crore, Carlyle’s stake sale could be worth ₹6,500 crore, the largest-ever made by a PE firm through a public listing in India, Mint had reported on 2 December.
Mindspace Business Parks REIT is the second REIT to attempt a listing on Indian bourses. In March 2019, Bengaluru-based developer Embassy and Blackstone had launched India’s first public REIT, Embassy Office Parks REIT, in a ₹4,750-crore IPO. According to the draft prospectus filed by Mindspace, the REIT aims to raise ₹1,000 crore through a fresh issue of shares, while existing shareholders, K. Raheja Corp. and Blackstone, will offload a part of their shareholding through an offer for sale. The REIT has a portfolio of commercial properties with a total leasable area of 29.5 million sq. ft across Mumbai, Hyderabad, Pune, and Chennai.
UTI AMC’s IPO will see its existing shareholders, SBI, Life Insurance Corp. of India, Bank of Baroda, Punjab National Bank, and American asset manager T Rowe Price, sell shares worth more than ₹3,000 crore. Other companies that have filed their draft IPO papers in the last three months include Equitas Small Finance Bank, online travel company EasyTrip Planners, and private equity firm True North-backed mortgage financier Home First Finance.