IPO pipeline to remain strong; 10 companies aim to raise Rs 20,000 crore in December

New Delhi: The primary market is expected to remain vibrant, with at least 10 companies, including supermart major Vishal Mega Mart and Blackstone-owned diamond grading firm International Gemmological Institute (India) Ltd expected to raise a combined Rs 20,000 crore in the next month, merchant bankers said.

Education-focused NBFC Avanse Financial Services, TPG Capital-backed Sai Life Sciences, hospital chain operator Paras Healthcare, and investment bank DAM Capital Advisors are also among the companies planning to launch their IPOs in December, they added.

The companies aim to raise a total of Rs 20,000 crore through their public offerings. These IPOs will span various sectors, and deal sizes, and include both fresh issues and offers for sale.

Trivesh D, COO of Tradejini, an online brokerage house, told PTI that the Maharashtra election verdict and the UP Lok Sabha by-election results have created a positive market sentiment that could boost IPO activity and fundraising efforts.

While 2024 has been a strong year for IPOs, some recent issues have struggled in the secondary market, highlighting the recurring challenge of pricing during a bull run when issuers often aim for higher valuations, he said.

"For now, with election-related funds returning to the market and the grey market becoming active again, the IPO space has regained some momentum," he added.

The companies are tapping the primary market to provide an exit route to the existing shareholders, raise funds for expansion plans, retire debt, and support working capital requirements.

Vishal Mega Mart is looking to float an Rs 8,000-crore IPO, which will be entirely an offer-for-sale (OFS) of shares by promoter Samayat Services LLP, with no fresh issue of equity shares, according to the updated draft red herring prospectus (DRHP).

Gemmological Institute is eyeing Rs 4,000 crore through an IPO. The initial share sale is a combination of a fresh issue of equity shares worth Rs 1,250 crore and an OFS valued at Rs 2,750 crore by promoter BCP Asia II TopCo Pte Ltd, an affiliate of Blackstone, draft papers showed.

Avanse Financial Services is aiming to launch Rs 3,500 crore IPO. This comprises a fresh issue of equity shares of up to Rs 1,000 crore and OFS of up to Rs 2,500 crore by the selling shareholders. The company, promoted by Olive Vine Investment Ltd, an affiliate of private equity major Warburg Pincus, proposes to use the funds to increase its capital base for future needs.

Also, diagnostic chain Suraksha Diagnostic, packaging equipment manufacturer Mamata Machinery and Transrail Lighting will float their respective public issues in the next month.

Moreover, 75 companies, including Hyundai Motor India, Swiggy, NTPC Green Energy, Bajaj Housing Finance, Ola Electric Mobility and FirstCry's parent Brainbees Solutions have already mobilised around Rs 1.3 lakh crore collectively via mainboard. This was way higher than Rs 49,436 crore garnered by 57 firms through the route in the entire 2023.

The primary market is experiencing strong interest from both issuers and investors across various sectors.

Going ahead, over 30 IPOs are expected in the coming month. This huge pipeline could strain liquidity and the market's ability to absorb them, especially if foreign investors keep pulling out funds, Saurabh Patwa, Head of Research and Portfolio Manager, Quest Investment Advisors, said.

Additionally, IPO investors over the past five fiscal years have enjoyed significant gains. As many as 236 IPOs were launched between FY21 and FY25 which delivered an average listing gain of 27 per cent for the retail bucket, with current gains soaring to 105 per cent (as of October 31, 2024), Trivesh said.