IPOs (initial public offerings) have generated a lot of buzz in recent months. non-public businesses and startups looked to profit on the positive capitalist sentiment within the market.
Over forty companies launched their IPOs in 2021 (until September) raising over ₹700 bn.
Around thirty more are probably to come out with their IPOs within the October-December quarter as well as fintech big Paytm, and insurtech firm Policybazaar.
Most of those IPOs are profitable for investors and are trading on top of their issue value.
For instance, the stock of home health care and wellbeing product maker Nureca has surged over 300 percent to ₹1,738 from its issue value of ₹400.
The stock of Paras Defence has rallied over 380% to ₹846 from its issue value of ₹175 per share.
If the market momentum continues and therefore the liquidity remains high, then the remaining IPOs may witness strong demand.
This momentum is predicted to be carried into the New Year as well. Here are four IPOs to appear forward to in 2022.
#1 life insurance Corporation of India (LIC)
State-owned life insurance Corporation of India is anticipated to come out with its IPO sometime within the fourth quarter of the fiscal year 2021-22.
The ipo is expected to be India’s biggest-ever initial public offering with the govt. selling a stake of 5-10% within the insurance company.
The listing are going to be crucial for the govt. to fulfill its withdrawal target. It’s estimated that this ipo would fetch the government the govt. bn and ₹800 bn.
LIC is India’s largest life insurer, with substantial money reserves and a long history of trust.
It’s additionally the foremost profitable company owned by the govt.. consistent with a media report, the insurer created a stock market profit of around ₹100 bn just between april and June 2021.
LIC additionally features a large market share of 49.8%. The remaining twenty three private companies like HDFC Life and ICICI prudential life insurance have the remaining 50.2% share.
As per media reports, a ministerial panel dubbed, the ‘alternative mechanism on strategic divestment’, can select the size of the stake to be sold . It’s probably it’ll not be over 10 percent.
Other details like the value band, the grey market premium, exact issue size and face price of the IPO are yet to be disclosed. it’s also unclear what the precise dates of the IPO are going to be as of now.
That apart, the govt. is considering a proposal for foreign investors to own as much as twenty percent in LIC, which might enable them to participate within the nation’s biggest IPO.
It’s discussing a plan to amend foreign direct investment (FDI) rules in order that investors will acquire the stake without the government’s approval under the so-called automatic route.
No matter what happens, this can be this is be the defining IPO event of 2022.
#2 Byju’s
India’s most beneficial startup, online education supplier Byju’s, is also in talks to lift money via an IPO next year.
It plans to raise between US$400 m to US$600 m.
The Bangalore-headquartered company is predicted to shut its pre-IPO fundraise during a few weeks at a valuation of about US$21 bn. It’s probably to be split roughly evenly between equity and debt.
Byju’s aims to file its initial IPO documents as early because the second quarter of next year, shortly after the close of its fiscal year in March.
It had previously looked at a timeline of twelve to twenty four months after the fundraise.
As per reports, the startup and its bankers are discussing a valuation of US$40 bn to US$50 bn. Byju’s was valued at US$18 bn in its latest round last month, up from US$16.5 bn in june 2021.
The online education startup has prominent international investors as well as Facebook founder Mark Zuckerberg’s Chan-Zuckerberg Initiative, Naspers, Tiger global Management, and private equity giant Silver Lake Management.
Its bankers include Morgan Stanley, Citigroup, and JPMorgan Chase.
Byju’s has been on an acquisition binge in the past year, getting startups offering coding lessons, professional learning courses, and check preparation classes for competitive Indian exams.
The company added forty five m students to its platform in India last year. It had more than one hundred m users on the app in July 2021. Of these, 6.5 m were paid subscribers.
The company said that it’s targeting ₹100 bn (US$1.4 bn) revenue within the fiscal year 2022, with a twenty percent gross margin.
#3 Ola
Ride-hailing an ola is additionally exploring a public an early next year with associate aim to raise a minimum of US$1.5-2 bn.
This values the Bengaluru-based unicorn at US$12-14 bn.
The company can raise half the capital through a primary issue whereas the remainder the rest through a suggestion for sale (OFS).
Unlike most startups, ola is profitable.
The company reported a standalone operative profit of ₹898 m for the twelvemonth 2021 versus a loss of ₹6.1 bn a year ago.
Despite revenue down sixty fifth from a year ago due to the pandemic, ola turned a profit, helped by aggressive value cuts and a reduction within the workforce.
Earlier last month, ola raised US$500 m in what could be termed a pre-IPO round. private equity companies, Warburg pincus and Temasek Holdings invested with, along with 2 others.
Ola additionally recently declared the acquisition of GeoSpoc, a six-year-old Pune-based geospatial company. With GeoSpoc, the company is looking at building ensuing generation of location technology for the world.
#4 Delhivery
Adding to the list of tech firms that plan to list next year is logistics company Delhivery.
The company plans to raise US$400-US$500 m via its IPO.
It has already filed its draft red herring prospectus (DRHP) with the market regulator.
The issue size of the IPO is predicted to be around ₹74.6 bn of that ₹50 bn are going to be via a recent issue and ₹24.6 bn from an offer for sale.
Existing shareholders that conceive to sell their stake are China Momentum Fund (Deli CMF) – ₹4 bn, carlyle – ₹9.2 bn, SoftBank – ₹7.5 bn, and Times web – ₹3.3 bn.
The likely valuation expected by the corporate via the issue is around US$5.5 bn.
The company plans to use the takings for funding organic growth initiatives and for funding inorganic growth through acquisitions and alternative strategic initiatives.
Delhivery recently signed an agreement to acquire a 100 percent stake in rival express logistics player Spoton logistics.
The company additionally issued bonus shares to its shareholders through a resolution passed at its Extraordinary General Meeting (EGM) persevered twenty nine September 2021.
The IPO market is booming in India will the trend continue?
Following the recent correction, the Indian stock market is still currently trading high and IPOs are attracting some wild valuations.
Given the abounding liquidity, the market regulator easing listing procedures and overall optimistic sentiments, the initial public offering craze is understandable.
Data suggests that companies raised funds to the tune of US$4.6 bn from IPOs last year. many believe this amount are going to be easily surpassed in 2021.
As corporations line up to raise funds from the market amid high valuations, investors need to think about several factors before investing their money in an IPO.
If you’re investing in an IPO, weigh in all the positive and negative factors affecting the corporate.
