The primary market market route to raise funds seems to be gaining some ground all over again as companies which have been sitting on the sidelines for over a year are looking to come out with initial public offer (IPO) of shares after the Union budget, due on July 6.
The mood seems to be returning in the backdrop of an industrial revival and expectations of a pro-growth budget.
According to Prime Database, which tracks share issues, about 17 companies which have received the regulatorory approval from the Securities and Exchange Board of India (SEBI) are likely to enter the market to raise about Rs 7,000 crore over the next few months.
While Mahindra Holidays and Resorts is all set to open its public issue towards the end of this month to raise close to Rs 450 crore, others are likely to join it after the budget announcement.
“The issue should come towards the end of June and the company is fairly confident of a successful listing even as it is a big IPO in several months,” said a source close to the development on condition of anonymity.
This will be the biggest IPO in the last 12 months since KSK Energy Ventures whose public issue opened for subscription in June 2008 to raise Rs 830 crore. There have been successful issues later, but involving much smaller amounts of capital.
“I see significant announcement of IPOs only a week after the budget is announced,” said Prithvi Haldea, founder managing director, Prime Database. “After the budget, if the markets remain buoyant, IPOs will slowly start to happen but if volatility comes in then they are likely to go on hold.”
While most of the private sector IPOs should happen after the budget, experts believe that public sector undertakings (PSUs) need not wait for market situation to improve.
“These are strong companies with high credentials and anytime is good time for government divestment. The government should in fact speed up the process so that these can revive the market,” said Haldea.