First big private sector issue this year, may break market-induced freeze.
Kishore Biyani’s Future Ventures is looking at tapping the primary market with a Rs 750-crore initial public offer (IPO) next month, according to two persons with direct knowledge of the matter. This could end the lull, since December last year, in big private sector IPOs.
Future Ventures, the venture capital arm of Future Group, had first applied with the Securities and Exchange Board of India (Sebi) for an IPO in 2008, but did not proceed with it due to adverse market conditions. At that time, the company aimed to raise Rs 3,730 crore from the IPO. It again filed the draft prospectus for the issue in August last year and has approval from the market regulator.
| LAST FIVE BIG IPOS | |||
| Company name | Issue size (In Rs crore) | Issue period | |
| Open | Close | ||
| A2Z Maintenance | 776.31 | 8-Dec-10 | 10-Dec-10 |
| Prestige Estates Project | 1200.00 | 12-Oct-10 | 14-Oct-10 |
| Oberoi Realty | 1028.61 | 6-Oct-10 | 8-Oct-10 |
| Ramky Infrastructure | 530.00 | 21-Sep-10 | 23-Sep-10 |
| Orient Green Power Co | 900.00 | 21-Sep-10 | 24-Sep-10 |
| Data compiled by BS Research Bureau | |||
“Tomorrow or day after, we are meeting our bankers. Since we have Sebi clearance, our efforts are on to bring out the issue at the earliest,” a senior executive involved with the IPO, said on condition of anonymity.
Enam, JM Financial and Kotak Mahindra Capital are the book running lead managers for the IPO.
However, the impact of Budget proposals on the markets would play a major role in the launch, said bankers in the know.
Also Read
Future Ventures would be the second venture capital firm to go for an IPO after IL&FS Investment Managers tapped the markets in March 2010.
Biyani has modelled Future Ventures on iconic investor Warren Buffett’s investment company, Berkshire Hathaway, which invests in companies and holds stakes for the long term.
A2Z Maintenance, which raised Rs 776.31 crore in December, was the last big private sector IPO. The two small IPOs that have come this year so far — Omkar Speciality Chemicals and Midvalley Entertainment — raised Rs 79.38 crore and Rs 60 crore, respectively.
Market forces freeze
A sharp correction in the secondary market since the start of this year has forced many private sector companies to defer their IPO plans. The Bombay Stock Exchange benchmark, the Sensex, has lost nearly 11 per cent in 2011 so far.
“Not many companies would prefer to come out with IPOs when foreign institutional investors (FIIs) are withdrawing money. You need a supportive secondary market for primary market issues,” said the head of investment banking at a domestic firm, on condition of anonymity.
After pumping in close to $30 billion (Rs 1.4 lakh crore) in 2010, FIIs have sold Indian shares worth $1.57 bn (Rs 7,150 crore) in this year so far.
According to PRIME Database, there are as many as 45 companies that have Sebi approval for an IPO and are waiting for the right market conditions to proceed. These companies collectively plan to raise nearly Rs 37,000 crore from the equity market.
Some bigger private sector IPOs that have not hit the market so far despite Sebi approval include Jindal Power (Rs 7,200 crore), Sterlite Energy (Rs 5,100 crore), BPTP (Rs 1,500 crore), L&T Finance (Rs 1,500 crore), Avantha Power & Infrastructure (Rs 1,250 crore), Ind-Barath Power Infra (Rs 1,140 crore), Raheja Universal (Rs 864 crore) and Muthoot Finance (Rs 800 crore).