The initial public offering (IPO) market has seen some momentum of late with robust responses to recent issues, however, only some have been able to ride the wave.
A recent report by Business Standard noted that so far in 2023, 23 companies have let their approval granted by the markets regulator — the Securities and Exchange Board of India (Sebi) — lapse.
One must note that a company has to launch its IPO within a year from the date of the final observations offered by Sebi on its draft red herring prospectus (DRHP), a preliminary document filed before an IPO. About a dozen such approvals have lapsed since April. And, half a dozen are staring at expiry in the next six weeks, informed BS.
It further pointed out that these IPOs, whose approvals lapsed, could have cumulatively raised ₹48,180 crore. Just the issues expiring in the next six weeks could mop up ₹3,019 crore, added the report.
According to investment bankers, some companies may re-file their DRHPs so that they can have another shot at listing whereas some are looking at alternative ways of raising capital.
Aadhar Housing Finance, API Holdings, Mccleods Pharma, Bharat FIH, and Fab India are among the companies that have seen the one-year approval period lapse, as per BS. Meanwhile, companies whose approvals expire before July include India Exposition Mart, Corrtech International, Senco Gold, and PKH Ventures, it added.
So far in 2023, six companies have raised ₹6,430 crore through IPOs.
The report explained that a combination of various factors — rate hike fears, Hindenburg’s report alleging irregularities in the Adani Group and the banking crisis in the US led to heightened volatility and as a result, issuers have become cautious about their listing plans.
Moreover, DRHPs were filed last year with the expectation of higher valuations, however, there is a discrepancy between the pricing aspirations of promoters and what the market is willing to give, the experts mentioned.
Going forward, bankers said more companies may let their approvals lapse.
Apart from pricing, changes in the outlook of the issuing companies’ prospects will be the key factor in determining if they will launch their issues, added the report.
