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Quarter-end IPO filing rush with Sebi

By
IPO, Global Healthcare Services, SEBI

A slew of companies have approached the stock market regulator with applications for an Initial Public Offer (IPO).

An analysis of data provided by Prime Database shows 16 companies filed their draft prospectus with the Securities and Exchange Board of India (Sebi) between July and September, the highest in four years. Nearly half, including Larsen & Tourbo Infotech and Quick Heal Technologies, filed this week.

Investment bankers said the quarter-end rush was to file for IPOs with the March quarter financials. Those filing for IPOs after that would have had to do so with June quarter numbers, which could mean a delay. A company can file for an IPO with financial numbers not older than two years. Typically, the financial numbers of unlisted companies take longer than listed ones.

“A lot of the companies which have filed for IPOs now must have started work in July. These can obtain Sebi approval with their March quarter numbers,” said B Madhuprasad, chairman, Keynote Corporate  Services. “The filings have increased considerably compared to last year. If the market turns stable in the next few months, we will see these companies launch their offerings.”

An offer document is available for public comments for a month after a company files for an IPO. After which, Sebi starts processing the IPO, which takes another three to four weeks. Once all its queries are satisfactorily replied to, by the company or the investment bankers, a company can go to the market.

Quarter-end IPO filing rush with Sebi

“A lot of companies are waiting. However, stability in the secondary market is critical for these IPO plans to fructify. Fund raising would be challenging if the volatility and foreign outflows we saw in the September quarter continues,” said an investment banking head with a foreign lender, asking not to be named.

The Indian markets fell nearly six per cent in the three months to September, the most since the December 2011 quarter. Foreign investors pulled out around $3 billion from Indian stocks in the quarter.

Among the prominent names that applied for IPOs during the quarter are Coffee Day Enterprises, which operates the Café Coffee Day chain, and Interglobe Aviation, which operates the country’s largest airline, IndiGo.

So far this year, nearly $1 billion (Rs 6,500 crore) has been raised via IPOs, nearly five times the amount raised in the first nine months of last year.

 

Equity-linked issuance by Indian companies raised a total of $18.6 billion (around Rs 1.20 lakh crore) during the first nine months of 2015, more than double compared to the amount raised in the same period a year ago. The equity-capital-raising during the first nine months of this year was the highest since 2007 (eight-year high), when India Inc had raised $24.2 billion through equity-related instruments. The government contributed to the bulk of the capital-raising. In August, it sold a 10 per cent stake in Indian Oil Corporation to raise $1.4 billion. The government also divested its holdings in Rural Electrification Corp, Power Finance Corp, and Dredging Corp of India. In January 2015, the government raised $3.7 billion, by selling a part of its stake in Coal India, the biggest deal so far this year.

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