Mumbai: After a three-month drought in the Indian primary market, several companies, including cables and consumer electronic goods maker Polycab Wires Pvt. Ltd and hotel operator Chalet Hotels Ltd, are gearing up for their public offers, according to four people aware of the developments.
In 2018, 24 companies raised ₹30,959 crore through their initial public offerings (IPOs), while 2017 witnessed 36 companies raising ₹67,147 crore through public floats, data from primary market tracker Prime Database shows. However, between October and December 2018, companies had desisted from launching IPOs, considering the highly volatile stock market.
The Indian equity markets witnessed extreme ups and downs during the three months owing to the liquidity crisis in the NBFC space, macro economic headwinds, such as a depreciating rupee and high crude price, and concerns over state election results.
“The markets were volatile in the last few months and valuations, especially in the mid- and small-cap space, had seen significant corrections. Therefore, pricing IPO deals was a big challenge for issuers and, thus, companies stayed away from launching deals. Investors were also not too comfortable to invest in such times,” said an investment banker focused on equity capital market transactions, requesting anonymity.
According to another banker, companies are now looking to hit the market with their IPOs before volatility returns ahead of the upcoming general elections. “Several companies are on roadshows and will try to tap the markets in the coming weeks. The market expects a window of opportunity for IPO deals till the end of February, and companies are trying to take advantage of it. We could see at least 5-6 IPOs in this period.” The second banker also requested anonymity.
Besides, Polycab and Chalet Hotels, Harsha Engineers Ltd, Dodla Dairy Ltd and Indiamart Intermesh Ltd are also looking to launch IPOs, the people cited above said.
Collectively these companies are expected to raise ₹5,600 crore through share sales. “IndiaMart has already received the final observations from the Securities and Exchange Board of India (Sebi) for its IPO. We will decide the timelines in consultation with our BRLMs (book running lead managers,” an IndiaMart spokesperson said in an email response to Mint’s queries.
Email queries to Chalet Hotels, Polycab, Dodla Dairy and Harsha Engineers did not elicit any response till press time.
International Finance Corp.-backed Polycab had filed its draft red herring prospectus with the market regulator in October. The company plans to raise ₹2,000 crore through the IPO, out of which ₹500 crore will be in fresh capital, which will be used to repay all or a portion of its debt and to fund incremental working capital requirements. Both Polycab promoters and IFC are looking to sell a part of their stakes through the offer for sale.
Chalet Hotels is also expected to raise ₹2,000 crore through its IPO. According to the company’s draft red herring prospectus, it plans to raise ₹950 crore in fresh capital, while the promoters will sell 24.68 million shares through the offer for sale. The hotel owner plans to use the fresh capital for repaying debt.