Seven IPOs worth Rs 140 billion to hit markets in the coming week

The IPO lane is getting busy as at least seven companies, including Lodha Developers and HDFC Mutual Fund, are expected to hit the capital market in the coming week to raise over Rs 140 billion.

The first among the lot would be TCNS Clothing, which sells its products under W, Aurelia and Wishful brands, that will launch its Rs 11.25-bilion initial share-sale this week.

While six others -- Lodha Developers, HDFC Mutual Fund, Nekkanti Sea Foods, Flemingo Travel Retail, Patel Infrastructure and Genius Consultants -- are expected to launch their respective IPOs in the coming week, according to merchant banking sources.

 

Together, these seven companies are aiming to raise more than Rs 140 billion, they added.

These companies are coming out with initial public offers (IPOs) to raise funds for business expansion plans, repayment of loans and to support working capital requirements.

Further, many firms are opting the IPO route to give partial exit to their existing shareholders including private equity and venture capital firms.

By taking the IPO route, companies will also achieve the benefits of listing the equity shares on the bourses, which enhances their brand name.

"These companies have already secured markets regulator Sebi's approval to float IPO and now they are expected to launch their initial public offers next month," a merchant banker said.

Moreover, 18 companies have already raised Rs 236.70 billion through their respective IPOs in January-June this year, which is higher than Rs 120 billion garnered by 13 issuers in the first six months of 2017.

Individually, realty major Lodha Developers plans to raise an estimated Rs 55 billion through its IPO, sources said.

This includes fresh shares worth Rs 37.50 billion besides an offer for sale of 18 million shares by the promoters. Also, it aims to raise about Rs 7.50 billion out of the proposed issue through a pre-IPO placement of 9.5 million fresh shares, as per the draft papers filed with Sebi.

Besides, the public issue of HDFC Asset Management Company, the country's largest mutual fund firm, may garner Rs 35 billion, sources said.

Going by the draft papers, the fund house's IPO offers up to 25.4 million equity shares of the fund house through an offer for sale of 8.59 million shares by HDFC and up to 16.8 million shares by Standard Life.

Leading duty-free and travel retail operator Flemingo will issue fresh shares worth Rs 24.23 billion besides an offer for sale of 11,29,500 shares by one of its subsidiary Flemingo Duty Free Shop Mumbai Pvt Ltd. Sources said that the firm will raise Rs 26 billion via IPO.

Nekkanti Sea Foods' Rs 7.50-billion IPO comprises fresh issuance of shares worth Rs 2.50 billion, besides, an offer for sale of up to 8 million equity shares by the existing shareholders.

Patel Infra's IPO will see sale of equity shares worth Rs 4 billion, while Genius Consultants' IPO comprises fresh equity worth Rs 1.70 billion, besides, one million shares of promoter Rajendra Prasad Yadav.

"The IPO market is buoyant for good quality company issues which are priced cautiously. There is investor appetite for companies which price their IPOs keeping money-on-table for investors," J Kalyaniwala, vice president of investment banking at Prabhudas Lilladher said.

Experts said that proactive regulatory environment coupled with uplifted investor sentiment has helped the IPO market.

Further, Sebi, in its board meeting last month, had decided to reduce the timeline for announcement of initial share-sale price band, which is further going to aid the IPO market.

Under the new rules, the timeline for announcing price band for initial share-sale offer will be reduced to two days from the current five days.