By Ruma Dubey
The stock markets or the “secondary markets” might be lackluster and listless at the moment, waiting for GST and new triggers but the “primary market” or the IPO market has no such compulsions. If Dalal Street is quiet, the IPO markets are buzzing with activity, almost a frenzy not seen in some years now.
Today’s market mover and shaker was undoubtedly Tata Motors and all because its JLR unit is planning on a listing, maybe in London and New York. There is no talk whatsoever of Indian listing yet the market is thrilled merely with the word “IPO”.
Going by the performance of past few IPOs, especially the resounding success of D-Mart has bolstered faith and many companies that too big ones, which had been waiting in the sidelines for long are now planning on their IPOs.
Mahindra & Mahindra announced last week that its board had approved sale of a part of shareholding in its arm Mahindra Logistics, a subsidiary of the company through an IPO. Though no details on the stake sale, issue size; nothing is known, the market is happy. The IPO timing being proposed is 2019… now that’s a long time off for the markets to celebrate today!
Last week, PSU Dredging Corporation hit a new high on news that the Govt is planning strategic stake sale and hopes to raise Rs.1400 crore. In the next couple of months we could see Govt selling a 3% stake in Indian Oil Corporation and is expected to garner Rs.6000 crore. Then there is SBI, which in March stated that it’s Board had approved fund raising to the tune of Rs.13,000 crore via various routes including an institutional share sale, rights offering and depositary receipt sale.
Talking about SBI, it is planning to offload its 10% in its insurance arm, SBI Life and an IPO is being planned for next fiscal. UTI Mutual Fund is also eyeing an IPO and is most likely to happen in second half of current fiscal- that will be the first domestic asset management company to get listed, if and when it happens.
HDFC is also looking to list its insurance arm – HDFC Standard Life and it hopes to sell its 10% stake. Continuing with insurance, New India Assurance and even GIC IPO could also become a reality with the Govt announcing plans to divest 25% stake in each.
Other big names getting ready for an IPO includes NSE, Indian Renewable Energy Development Agency (IREDA), Nakshatra World, Cochin Shipyard and Reliance Nippon Life Asset Management. Companies like India Grid, Genesis Colours, Matrimony.com, Four Seasons Residency, Bharat Road Network, Continental Warehousing Corporation are some of the issues which have filed their DRHPs with SEBI, awaiting the green signal.
As per Prime Database, in FY16, 53 companies raised money through IPOs to the tune of Rs.36,615 crore and this fiscal, till 31st May, 6 issues raised Rs.3,357 crore. This looks very tepid but surely the second half will be full of activity and fireworks on the primary market road.
Again the same old mantra will work – pricing, pricing and pricing…irrespective of the fundamentals, the pricing is crucial; if it does not leave too much gains on the table for the investor, it could all fizzle out.