Pre-poll euphoria: Strong response for PGCIL's offer spurs companies to fast-track IPO plans

MUMBAI: Power Grid Corporation's follow-on public offer has sparked life into an otherwise insipid primary market, driving merchant banks to quickly work on draft offer documents so that they can ride the pre-poll market tide.

At least a dozen companies, including BSE, GMR Airport, Shemaroo Entertainment, Wonderla Holidays, a few e-commerce companies like Bharat Matrimony and some state-owned firms are planning to launch public offers in the next three months, said bankers.

Prime Data, a market research and consulting firm, said Sebi-approved IPO proposals worth 72,000 crore are waiting to hit the market. "Many companies are in advanced stages of filing their IPOs as bankers believe April-May is the right time for it," said Abhay Bongirwar, MD & CEO of IDBI Capital.

"There's a lot of uncertainty about a stable government at the Centre post elections, therefore, bankers and companies want to market their offerings during the pre-election euphoria," he added.

In fact, it was the Power Grid's offer that triggered all the excitement. Foreign and domestic institutional investors lapped up the offer: in the qualified institutional buyers' category, the issue was subscribed 11.17 times, while in the non-institutional and retail segment, it was subscribed by a factor of 1.85 and 1.17, respectively.


"We could see select IPOs from consumer brands, tech companies and healthcare sector companies which have raised money from private equity funds," said Ravi Sardana, EVP-investment banking, ICICI Securities. "The current year has been a dull year and promoters are hopeful that sentiment will improve in 2014."

The amount raised through IPOs so far this year is about 1,601 crore though 35 issues, the lowest in a decade. But given the current market sentiment, there could be a revival of sorts, according to analysts and investment bankers.

"Many companies and bankers are ready with their September-end accounts which they are required to file for IPOs along with the offer documents. The market's positive sentiment is an added boost," said Dara Kalyaniwala, VP, investment banking, Prabhudas Lilladhar.

"There is always demand for quality issues at the right price," said Jagannadham Thunuguntla, head of research, SMC Global Securities.

"Retail investors are still wary of participating in public offers, but there's demand from institutional investors." Just Dail, a search engine service provider, was the only other known name apart from Power Grid to raise around 927 crore in May this year.