IPO Market Heats Up as Over 30 Firms Line Up Public Offers

New Delhi: Heating up the IPO or initial public offering space, over 30 companies have lined up plans to raise funds totalling over Rs 20,000 crore through public offers, including big names like IndiGo, Cafe Coffee Day, Matrix Cellular and GVK Airport.

At least 20 of these firms have already received the go-ahead from market regulator Securities and Exchange Board of India (Sebi) to launch their respective IPOs while draft IPO papers of five firms are currently "under process" but may be cleared soon.

Three companies - Cafe Coffee Day, Matrix Cellular and RBL Bank - approached the regulator last week while some others including IndiGo are expected to file their draft prospectus in the coming week.

GVK Group also plans to list its airports business arm, GVK Airport Developers, and may raise an estimated Rs 3,000 crore. It has developed Mumbai and Bangalore airports.

The flurry of activities in the IPO space follows stabilising trends in the stock markets and the companies are looking to raise funds to finance their business expansion and loan repayments and to meet the working capital requirements.

It also comes at a time when Sebi has announced a slew of fresh reforms in the IPO space, including for halving the listing period to six days and for making the application process for investors entirely cheque-free.

A majority of the companies which have approached Sebi are mid-sized and are looking to mop up between Rs 200 crore to 3,000 crore.

In the first six months of 2015, as many as 19 companies have filed their draft documents with Sebi to float their respective IPOs. In the same period, the capital markets watchdog has given approval to 20 firms to launch their initial share sale plans, some of which were pending from the previous year.

At the last count, five IPO draft papers were pending with Sebi for its 'observations' which are mandatory for any public issue to hit the market.

So far in 2015, eight companies have launched their IPOs and have collectively raised nearly 4,000 crore. In comparison, a total of six IPOs had hit the market in the entire 2014 and together garnered just Rs 1,528 crore.

Among the forthcoming IPOs, Indigo is eyeing Rs 2,500 crore, coffee shop chain operator Coffee Day Enterprises plans to raise Rs 1,150 crore, RBL Bank (formerly known as Ratnakar Bank) plans to mop up at least Rs 1,100 crore and Biocon arm Syngene International is looking to raise an estimated Rs 600 crore.

Others in the queue include fragrance maker S H Kelkar & Company and infrastructure firm Dilip Buildcon, Kalpataru Power Transmission subsidiary Shree Shubham Logistics, Prabhat Dairy, Catholic Syrian Bank and Nuziveedu Seeds.

Market experts believe that India's primary market is witnessing renewed interest from companies and existing investors.

"Though overall sentiment in market is positive for equity issuances, we believe firms with strong fundamentals and right valuation will only be able to tap the capital markets," ICICI Securities executive director Ajay Saraf said.

"The primary market is expected to get further boost by Sebi's approval of e-IPO norms," Geojit BNP Paribas investment strategist V K Vijaykumar said.

Last week, Sebi approved norms for firms to launch their IPOs in an electronic form, which is aimed at reducing the time taken between share sale and listing to six days from the current 12 days, enhance the reach of retail investors and reduce costs. The e-IPO norms would come into effect from January 1, 2016.