IPOs Still Popular During Elections: Companies to Raise Rs 10,000+ Crore in May
Initial public offerings (IPOs) continue to be popular with companies even during election season, which is typically seen as a volatile time in the markets. But this year, the IPO rush seems full steam ahead. In May, many firms are lining up mega IPO plans, ignoring the old wisdom of avoiding share sales when polls are on. It's raining IPOs out there! Companies like Indegene, Aadhar Housing Finance, TBO Tek, Go Digit, Awfis Space Solutions, and Kronox are leading the pack. Together, they are expected to raise a mammoth of over Rs 10,000 crore through public issues this month.
This year's latest IPO rush also shows the growth ambitions of new-age tech firms and startups wanting to tap public money. Even smaller companies have been listed. To put things in perspective, about 24 companies have already raised around Rs 18,000 crore from the primary markets so far in 2023. And more are in the pipeline.
High Profile IPOs Steal the Spotlight
Even with the national elections taking place over the next few months, initial public offerings (IPOs) remain popular for companies to raise money. Companies are expected to increase over 10,000 crore rupees through several major IPOs in May alone.
One of the most notable upcoming IPOs is for Indegene, a health tech company that provides services like analytics and medical writing to pharmaceutical and biotech clients. Indegene already has big-name investors, like the private equity firm Carlyle Group.
Through its IPO, Indegene is looking to raise around 1,842 crore rupees. The share price is expected to be between 430 and 452 rupees per share. That would give the company a pretty high valuation right off the bat!
It has always worked out with IPOs because the company issues some new shares to the public, raising fresh capital, and early investors like Carlyle sell off a portion of their shares to cash out a bit, known as an offer for sale or OFS.
The public subscription period for the IPO was opened in May. This period allowed regular investors to buy into the offering if they found Indegene's services and growth prospects appealing. This period has since concluded, marking a significant phase in the company’s journey towards expansion.
Elections and world events have not dampened investors' enthusiasm for IPOs (initial public offerings). Despite all the election buzz and worries about inflation and the war in Ukraine, Indian companies are still planning several major public listings over the next few months.
Get this-companies were expected to raise over 10,000 crore rupees through IPOs in May alone! Investors clearly still have a hearty appetite for promising new public companies.
One of the most anticipated upcoming IPOs is from Aadhar Housing Finance. You may not have heard of them, but they provide loans to low—and middle-income households who want to buy affordable homes. This unique company is actually owned by the American private equity giant Blackstone.
Aadhar Housing planned to raise 3,000 crore rupees in its IPO, which was likely scheduled for May. Of this amount, 1,000 crores were anticipated to come from issuing new shares to the public, while the remaining 2,000 crores were expected from Blackstone selling some of its stake in the company. The offer-for-sale portion was lower than the originally intended 4,000 crores, indicating that Aadhar had scaled back its initial plans somewhat.
When asked why the IPO market remained so robust despite global uncertainties, an expert named Ajay Saraf had explained that there was significant investor interest, both within India and internationally, in acquiring early stakes in high-quality companies. Thus, despite macro-level issues such as inflation and conflicts, individual companies with strong fundamentals continued to attract substantial capital through IPOs.
In retrospect, the success of past IPOs provided the market with confidence that new ones would also generate interest. Investors who had profited previously were likely to return for more if they perceived potential in newly listed companies.
A considerable number of domestic and international investors showed interest in the 12,141,102 equity shares that Indegene had allocated to anchor investors at a price of Rs 452 per share. Prominent participants in the anchor book allocation included SMALLCAP WORLD FUND, American Funds, and Fidelity Funds. Collectively, they contributed Rs 5,487,778,104 to the funding.
Overall, it's a healthy sign when elections and other macro events maintain companies' ability to access capital through stock account issuances. If market conditions remain stable, the strong momentum in IPOs will continue this year. More companies can fund growth, and investors get more options to allocate capital. It's a win-win for corporations and people putting money into these stocks.
