The IPO is fever is far from over. Companies are already in line to make maiden public offerings and raise over Rs one lakh crores by March 2022. In the year 2021, just a year after Pandemic, which is not yet completely over and its effects can still be seen over economic growth, a total of 63 companies mopped up a record Rs 1.2 lakh crore through initial public offerings (IPOs).
Investors showed great interest in the IPO, as liquidity increased and huge listing gains, made investors glued to the IPO market. The biggest IPO PAYTM raised Rs 18,000 crores and Nykaa gave an almost double return to its investors on its opening day.
Through initial public offerings, firms are raising funds for organic and inorganic growth initiatives, debt payments, and giving exits to existing shareholders. Anchor investors wait to get a reward for their investment and IPO has been one such option to exit the firm by selling shares at the primary market and getting returns on their investment.
Looking at high euphoria in the IPO market, SEBI has also tightened some IPO rules to manage volatility in the stock prices on a listing day. These rules are first, putting a cap on the amount of issue proceeds that can be used for unidentified organic growth, second rule is restricting the number of shares that can be offered by selling shareholders, the last one being increasing the lock-up of shares subscribed by the anchor investors.
Tight rules are not restricting companies to come up with their maiden public offering and 2022 is going to be the extension of euphoria seen in the primary market in the year 2021. Firms like OYO and Delhivery are expected to raise Rs 8,430 crores and Rs 7,460 crores respectively. The list of companies also includes Adani Wilmar with an expected Issue size of Rs 4,500crores, Emcure Pharmaceuticals to raise Rs 4,000crores, Vedant Fashion and Pradeep Phosphates to Rs 2500 crores ad Rs 2,200crores respectively. The other two major companies to float their IPO and make debut on the stock market are Medanta with an issue size of Rs2000 crores and Ixigo to raise Rs 1800 crores. Last but certainly not least markets is eagerly waiting for the largest insurer in the country, the Life insurance corporation of India to hit the market. The insurance company’ IPO size is expected to be around Rs 80,000 cr – 1 lakh crore. This massive IPO will take the sum above 1.44 lakh crores of amount to be raised in the first quarter of 2022.
Investors must stay prepared to invest in their favorite IPO, but they must do their research before investing in any of the initial public offerings, as the IPO’s are subject to market risk.