Tech Mahindra, GMR float success triggers IPO rush

The success of the public floats of Tech Mahindra and GMR Infrastructure seems to have given the primary market a shot in the arm, as several companies are knocking the door of the market regulator with draft prospectus for initial public offers.

In the last two days, at least four companies have filed the draft red herring prospectus with the Securities and Exchange Board of India (Sebi).

The list includes credit rating agency Icra Ltd, property developer Sobha Developers, infrastructure development firm Lanco Infratech and Pramid Saimira Theatre. The size of these issues ranges from Rs 100 crore to more than Rs 500 crore, investment bankers said.

While IPOs by commodity bourse MCX and public sector Power Finance Corporation are also in the pipeline, the mega issue by property developer DLF Ltd is awaiting the Sebi's final observation.

"As long as IPOs are priced reasonably and are attractively marketed, we don't see any problem in getting good response from investors," said Srinivasan Subramanian, head of investment banking at Enam Financial Consultants, which was one of the lead book runners for GMR Infrastructure's IPO.

The QIB (qualified institutional buyers) portion of Tech Mahindra's maiden float was oversubscribed 104 times, while the retail portion was oversubscribed 7.84 times.

However, the GMR Infrastructure IPO was not that successful. While GMR's QIB portion was oversubscribed 10.95 times, the retail segment went undersubscribed 0.52 times.

The primary market had been getting a lukewarm response from investors since the time of the Deccan Aviation IPO in May.

The issue, which was priced at Rs 148, was hammered at the bourses on listing and is now trading at a discount of 48 per cent at Rs 76.

The Reliance Petroleum public offer, which created a record in terms of investor response, is currently quoting at just over the issue price at Rs 60.40 (issue price was Rs 60 a share).

Last month, three mid-sized companies "� Shirdi Industries, Vigneshwara Exports and Blue Plast Industries "� were forced to withdraw their IPOs after the issues had failed to generate the necessary demand, reflecting changing investor sentiment for public issues.

"Companies with strong fundamentals will continue to receive good response from investors," said an official with SBI Caps.