 "IPOs make a strong comeback")
A long, dusty corridor piled with paper marks the entrance to the office of Western Press at Lower Parel in Mumbai. It is one of the largest printers of initial public offer, or IPO, documents in the country. A middle-aged man scribbles furiously on a bill book as he talks on the phone. The boss is not in office, he says and tries to get someone on the phone who can discuss the buoyancy - or otherwise - in the business. The call is transferred twice and then disconnected. The man goes back to his work. Everyone is much too busy to spend time talking.
Printing thick, telephone-directory-like prospectuses that had to be given out to every potential investor was big business for outfits like Western Press four years ago when the IPO market was robust. And then the market tanked. Western Press had ended up using its facility to print tickets, textbooks and telephone bills. Now, there is hope the market will revive, and orders for IPO documents will flow thick and fast to Western Press. Not just printers, the pick-up will benefit a whole lot of other people, from merchant bankers who will get to manage the IPOs to the media which will get paid for running advertising campaigns. Private equity funds, which had come as succour to Indian enterprises after the IPO market dried up, can look forward to monetising their investments.
Room for more
What makes people optimistic about the IPO market is the sustained rally in the stock market, which shows there is enough depth to absorb new paper. Since the beginning of the year, the Bombay Stock Exchange's Sensex has risen 20 per cent. One projection even talks of the 30-share index quadrupling to 100,000 in six years from now. Currently six companies - Advanced Enzyme Technologies, Great Eastern Energy Corporation, Intas Pharmaceuticals, Jyoti CNC Automation, Shemaroo Entertainment and Snowman Logistics- have the necessary approvals in place to come out with an IPO. Together, they intend to raise Rs 1,235 crore.
Apart from these companies, four others have filed for IPOs with the Securities & Exchange Board of India, or Sebi. News reports suggest that quite a few other companies, including some big names, are ready to tap the IPO market. The list includes theme park-operator Adlabs Entertainment, Ajit Gulabchand's Hindustan Construction Company-promoted Lavasa Corporation, Gujarat Fluorochemicals' clean energy arm Inox Wind and agrochemical firm Sharda Cropchem. All four have filed offer documents with Sebi and are awaiting clearance. Besides, Indigo Airlines and Cafe Coffee Day too plan to enter the primary market. According to a recent report by Bloomberg, Lodha Developers too plan to raise as much as a billion dollars (approximately Rs 6,000 crore) through an IPO. However, the plans have not been confirmed by the company. "A number of companies and their promoters are evaluating the IPO option and activities are expected to gather steam soon," says Ambit Corporate Finance Director Gautam Gupte.
Unlike some quick fund-raising instruments such as an offer for sale or qualified institutional placements - meant predominately for already listed companies - which get done in a few weeks, the time required for an IPO could be anywhere between six months and a year. That is the time a company and its merchant bankers take to prepare offer documents, get approvals and launch the issue. Bankers point out that the long gestation period for IPOs makes it challenging for them to time the market. For instance, in 2009, when the markets saw a sharp V-shaped recovery gaining a staggering 81 per cent, the buoyancy didn't necessarily translate into a boom for the primary market. In 2009, about 20 companies together raised about Rs 19,500 crore through IPOs, about half of what was raised in 2007. The year 2010, however, turned out to be a record year for the IPO market. It saw more than 60 companies cumulatively raise over Rs 37,000 crore, the biggest of them being state-owned Coal India: it mopped up around Rs 15,000 crore .
A poor show
Still, most merchant banks are said to be working on at least two mandates each, which suggest that the queue of companies, especially private ones, lining up to Sebi for approvals is set to increase, though it is likely to happen with a lag. In other words, if you are waiting for an IPO boom, next year seems a better bet.
Printing thick, telephone-directory-like prospectuses that had to be given out to every potential investor was big business for outfits like Western Press four years ago when the IPO market was robust. And then the market tanked. Western Press had ended up using its facility to print tickets, textbooks and telephone bills. Now, there is hope the market will revive, and orders for IPO documents will flow thick and fast to Western Press. Not just printers, the pick-up will benefit a whole lot of other people, from merchant bankers who will get to manage the IPOs to the media which will get paid for running advertising campaigns. Private equity funds, which had come as succour to Indian enterprises after the IPO market dried up, can look forward to monetising their investments.
Room for more
What makes people optimistic about the IPO market is the sustained rally in the stock market, which shows there is enough depth to absorb new paper. Since the beginning of the year, the Bombay Stock Exchange's Sensex has risen 20 per cent. One projection even talks of the 30-share index quadrupling to 100,000 in six years from now. Currently six companies - Advanced Enzyme Technologies, Great Eastern Energy Corporation, Intas Pharmaceuticals, Jyoti CNC Automation, Shemaroo Entertainment and Snowman Logistics- have the necessary approvals in place to come out with an IPO. Together, they intend to raise Rs 1,235 crore.
Apart from these companies, four others have filed for IPOs with the Securities & Exchange Board of India, or Sebi. News reports suggest that quite a few other companies, including some big names, are ready to tap the IPO market. The list includes theme park-operator Adlabs Entertainment, Ajit Gulabchand's Hindustan Construction Company-promoted Lavasa Corporation, Gujarat Fluorochemicals' clean energy arm Inox Wind and agrochemical firm Sharda Cropchem. All four have filed offer documents with Sebi and are awaiting clearance. Besides, Indigo Airlines and Cafe Coffee Day too plan to enter the primary market. According to a recent report by Bloomberg, Lodha Developers too plan to raise as much as a billion dollars (approximately Rs 6,000 crore) through an IPO. However, the plans have not been confirmed by the company. "A number of companies and their promoters are evaluating the IPO option and activities are expected to gather steam soon," says Ambit Corporate Finance Director Gautam Gupte.
Unlike some quick fund-raising instruments such as an offer for sale or qualified institutional placements - meant predominately for already listed companies - which get done in a few weeks, the time required for an IPO could be anywhere between six months and a year. That is the time a company and its merchant bankers take to prepare offer documents, get approvals and launch the issue. Bankers point out that the long gestation period for IPOs makes it challenging for them to time the market. For instance, in 2009, when the markets saw a sharp V-shaped recovery gaining a staggering 81 per cent, the buoyancy didn't necessarily translate into a boom for the primary market. In 2009, about 20 companies together raised about Rs 19,500 crore through IPOs, about half of what was raised in 2007. The year 2010, however, turned out to be a record year for the IPO market. It saw more than 60 companies cumulatively raise over Rs 37,000 crore, the biggest of them being state-owned Coal India: it mopped up around Rs 15,000 crore .
A poor show
Still, most merchant banks are said to be working on at least two mandates each, which suggest that the queue of companies, especially private ones, lining up to Sebi for approvals is set to increase, though it is likely to happen with a lag. In other words, if you are waiting for an IPO boom, next year seems a better bet.