Tech start-ups, chemical manufacturing firms, and restaurant chains, and many others, have gone public in 2021.
Many firms are also likely to list on domestic stock exchanges through an initial public offering (IPO) later this year.
At least 35 companies are planning to launch IPOs during October-December, with an aim to raise approximately ₹800 bn if the market sentiment remains positive.
There were 42 IPOs in the first nine months of the year (including the most recent IPO of Aditya Birla Sun Life). These 42 companies have raised up to ₹670 bn in the Indian markets so far.
This is an encouraging sign after a few snags in the previous financial year due to covid. The market has rebounded well. The Sensex marching to new record highs.
A positive market environment has given businesses even more confidence to go public to take advantage of this opportunity. As a result, October is likely to be a busy month for IPOs.
Let us take a look at the IPOs expected in October 2021.
Digital payments and financial services firm Paytm wants to hit the market with its ₹166 bn IPO at the earliest and very likely by the end of October.
The company had filed draft papers for its initial share sale with the market regulator on 15 July 2021.
According to the draft document, the company plans to raise ₹83 bn through fresh equity issuance and another ₹83 bn through an offer for sale (OFS).
The company has proposed to use ₹43 bn for growing and strengthening the Paytm ecosystem, including through acquisition of consumers and merchants and providing them with greater access to technology and financial services.
Paytm plans to earmark ₹20 bn for business initiatives, acquisitions, and strategic partnerships and up to 25% of the total fund raised through the IPO for general corporate purposes.
2. Adani Wilmar
Fast moving consumer goods (FMCG) company Adani Wilmar, known for edible oil ‘Fortune’, has filed its draft red herring prospectus (DRHP) with the market regulator to launch a ₹45 bn IPO.
The company is among the top players of the Indian FMCG segment and specializes in kitchen supplies including flour, pulses, sugar, and rice.
Adani Wilmar is a joint venture between Adani Group and Singapore-based Wilmar which was formed in 1999. The company is also the largest manufacturer of oleochemicals in India.
The objective of the IPO is to raise capital for expanding the company’s manufacturing facilities, prepayment of borrowings and also to fund strategic investments and acquisitions.
3. Aadhar Housing Finance
Private equity firm Blackstone Group-backed Aadhar Housing Finance is looking to raise ₹73 bn through IPO.
The company is among the largest affordable housing finance companies in the country. It caters to the home financing needs of the lower income groups of the society. The country has attempted to empower millions of individuals to buy their first homes.
It has branches across 20 states and union territories, operating in approximately 12,000 locations across India with assets under management of ₹114.3 bn. The company proposes to utilise fresh IPO proceeds towards strengthening its capital base.
Blackstone acquired a 97.7% stake in Aadhaar Housing Finance in June 2019. The purchase included the entire stake held by the then controlling shareholders – Wadhawan Global Capital and Dewan Housing Finance (DHFL).
4. Paradeep Phosphates
Last week, leading fertiliser company Paradeep Phosphates received market regulator’s go-ahead to mop up funds through an IPO.
The fertiliser manufacturing company is looking to raise ₹12.6 bn through fresh issue of shares and sale of over 120 m shares by its existing shareholders and promoters.
Currently, Zuari Maroc Phosphates (ZMPPL) holds 80.45 and Government of India owns 19.55% stake in the company.
Proceeds of fresh issue will be used to partly finance the acquisition of the fertiliser manufacturing facility in Goa, for payment of debt, and general corporate purposes.
Paradeep Phosphates is primarily engaged in manufacturing, trading, distribution and sales of a variety of complex fertilisers such as diammonium phosphate (DAP) and NPK fertilisers.
Its fertilisers are marketed under brands like ‘Jai Kisaan – Navratna’ and ‘Navratna’.
5. Seven Islands Shipping
Another IPO which is likely to hit markets in October 2021 is Seven Islands Shipping.
It’s a Mumbai-based crude oil carrier and seaborne logistic company. It’s looking to raise ₹6 bn through its public listing.
As per its DRHP, the IPO will include a fresh issue worth ₹4 bn. The rest of the public issue will comprise an OFS by existing shareholders and promoters.
The company owns and operates 20 Indian-registered vessels. A total of 1.1 million metric tonnes of deadweight capacity is available.
The IPO proceeds will be utilised to buy new vessels for crude oil transportation.
6. Keventer Agro
Mandala Capital-backed Keventer Agro is looking to raise ₹3.5 bn through fresh issue of shares with an offer for sale of 10.7 m shares by Mandala Swede SPV that holds a 6.16% stake in the firm.
Keventer Agro is a Kolkata based company, which is one of the leading players in the FMCG segment in India.
The company mainly specialises in packaged, dairy and fresh food products. It has over 90 products in its portfolio with availability of many products in a variety of taste and flavors.
It manufactures, packages, markets, and distributes products including Frooti, Appy, B Fizz, Appy Fizz, Bailley, Smoodh, which are licensed to them pursuant to various franchisee agreements.
The company plans to use the IPO funds for repayment of certain debts, working capital requirements, and general corporate purposes.
7. Arohan Financial Services
The Kolkata-based micro-finance lender is looking to raise ₹8.5 bn through the IPO. However, several media reports say that the company might raise ₹18 bn comprising a fresh issue of ₹9.5 bn and an offer for sale of ₹8.5 bn.
Arohan is a non-banking financial company (NBFC) and is also into microfinance serving the underpenetrated segments of the market.
Arohan Financial, which offers microcredit to women borrowers in financially under-penetrated and low-income states, will use the fresh issue proceeds to augment its capital base.
Apart from these companies, the following is a list of upcoming IPOs between October 2021 and December 2021:
IPO market is booming in India. Will the trend continue?
The Indian economy is expanding. India has a big demand potential due to the size of its population.
Satisfying such big business opportunities with bigger structures requires large investments.
Businesses with the capacity to generate and meet the demands of the economy are going public and seeking capital for future expansion.
Many companies are also raising capital in the wake of losses encountered during the Covid-19 pandemic.
Data suggests that companies raised funds to the tune of US$4.6 bn from IPOs last year. Many financial firms feel this amount will be easily surpassed in 2021 as more companies opt for a public offering.
Also, the steps taken by the central banks to face the challenges of Covid-19 have pushed ample amount of liquidity in the global markets. So, the current time is considered to be the best for IPOs globally.
At the same time, markets are showing higher potential returns for the next few years as the recovery is faster than expected.
According to industry experts, companies are going public due to the excellent performance seen in the stock markets and higher participation of first-time investors including high net worth individuals.
A report by State Bank of India (SBI) suggested that over 14.2 m new individual investors have participated in the stock markets in 2020-21.
Even as the pandemic continues to wreak havoc on India’s economy, the domestic stock market has not been affected at all. In fact, stock market benchmark indices S&P BSE Sensex and Nifty are performing better than ever at the moment.
Given the strong market performance, a greater number of recent IPOs have done exceptionally well, and more investors are eager to take advantage of this opportunity.
The combination of significant retail investor interest and liquidity has produced an ideal environment for firms to go public.
(This article is syndicated from Equitymaster.com)
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