LIC: LIC problem, volatility hit several companies’ IPO plans

Mumbai: LIC’s upcoming mega public offering and unfavorable market has forced several companies to postpone their IPO plans. The public insurer’s initial public offering, scheduled for March, is expected to suck over ₹70,000 crore from the primary market.

Investment banking sources said most companies that had received approval from the capital markets regulator and were planning IPOs in the current quarter have postponed this for a few months, citing a lack of investor appetite due to market volatility and significant float.

“Several companies that have received Sebi (Securities and Exchange Board of India) approval are in wait-and-see mode given the volatility in secondary markets,” said Ajar Saraf, chief executive of ICICI Securities.

“They prefer to wait for the markets to stabilize and for LIC to complete the IPO process before proceeding with their respective IPOs,” Saraf added.

46 Cos received Sebi Nod

“However, a few small IPOs could hit the primary market over the next month,” Saraf said. Delhivery, Go Airlines, Ruchi Soya, One Mobikwik Systems, Emcure Pharmaceuticals, Gemini Edibles & Fats, Global Health, Paradeep Phosphates and India1 Payments are among those who have postponed their IPO plans, bankers said. The companies did not respond to ET’s questions. Currently, 46 companies have received a nod from Sebi to raise around Rs 66,000 crore.

About 45 companies including LIC have filed their Draft Red Herring Prospectus (DRHP) with the regulator to mop up nearly Rs 1.4 lakh crore, according to primary market activity tracker Prime Database.

Companies generally have a one-year window to launch their IPOs from the date of Sebi’s approval.

About 18 of the 51 companies that were listed on the public market in the current fiscal year are currently trading between 5% and 60% below their offer price.

CarTrade Tech, the parent company of Paytm, One97 Communications, Fino Payments Bank and Windlass Biotech lost more than 40% of their issue price.

The NSE benchmark, Nifty, is down 5% in the past month. The Nifty Midcap100 and Smallcap100 indices plunged 8% and 11% respectively over the same period.

According to market participants, the poor post-IPO performance and the turbulent turn of the stock markets in recent times have forced some companies to postpone their IPO plans.

“A range of issues, including ongoing geopolitical crises, inflation, the prospect of interest rate hikes, continued selling by foreign portfolio investors and rising crude oil prices, have plagued markets. secondaries, and issuers will wait for confidence to return to the market,” said Ravi Sardana, an investment banker. “In a volatile market, it is difficult to forecast demand and fix valuations.”

Go Airlines and Ruchi Soya Industries (offer to sell) received Sebi approval in August last year, while Gemini Edible and India1 Payments IPOs were approved in November.

“A lot of companies, especially new-era tech companies, will have to reassess issue sizing and valuations following the recent new issue debacles,” said a senior investment bank executive. “Also, some are exploring an option to update their FY22 numbers and launch the IPO in May or June, as growth has been much better in the current FY than in the year. former.”

According to Prime Database, 49 companies have raised a record Rs 1.08 lakh crore so far in FY22, compared to Rs 31,266 crore raised by 30 companies in FY21 and Rs 20,350 crore by 13 companies in FY19.

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