Twenty-seven companies that were looking to raise money worth ₹38,000 crore through initial public offerings (IPO) have let their regulatory approvals lapse in the past six months, The Economic Times (ET) reported on Monday.
According to ET, diminished investor appetite and an uncertain market outlook are the reasons that forced the companies to defer their IPO plans.
As per the report that cites Prime Database numbers, the permissions to another nine firms planning to raise a total of ₹15,000 crore are set to expire over the next two months.
The Securities and Exchange Board of India (SEBI) regulations state that a company must launch an IPO within a year of receiving approval. The companies must submit new prospectus after a year.
"In the first half of last year, when the market was at its peak, several companies decided to go public, thinking favourable market conditions and surplus liquidity," Gopal Agrawal, head of investment banking at Edelweiss Financial Services told ET.
"However, when they got the SEBI nod in the second half, secondary market conditions worsened and the demand for public issues also faded," added Agrawal.
The report stated that the one-year period for Pune-based Emcure Pharmaceuticals ended on December 8, 2022. Wadia group-owned Go First also deferred its public issue to raise ₹3, 600 crore.
Similarly, Gemini Edibles, India 1 Payments, One Mobikwik Systems and Northern Arc Capital, among others, also postponed their IPOs.
"The year 2022 was not easy for secondary and primary markets, with the Ukraine war, inflation and logistic supply issue, among others," Dharmesh Mehta, managing director and chief executive of DAM Capital, was quoted as saying in the report.
"There was no demand for a few IPOs, while some managements did not like the valuations the market was giving them. Also, the market was not ready for the large IPOs," added Mehta.
The pipeline is full, with public offering worth about ₹75,000 crore having received SEBI permissions. IPOs worth another ₹55,000 crore are awaiting the regulator's clearance, according to Kotak Capital.
"We expect IPOs in 2023 to increase by 30 percent, driven by sectors such as pharma, healthcare, real estate, REIT (real estate investment trust), InvIT (Infrastructure investment trust) and consumer," V Jayashankar, head of Investment Banking at Kotak Capital, said, as per the report.