Bullish market, reforms lure cos to look at IPOs

Five companies have filed documents with Sebi in two months

Buoyed by improved investor sentiments in the stock market, companies are warming up to the idea of raising funds through initial public offerings (IPOs). A number of companies have firmed up their IPO plans to hit the market.

At least five companies have already filed their draft offer documents for IPOs with the market regulator Sebi in the past couple of months, while a similar number of companies, including retail chain operator Spencer’s, satellite TV broadcast services arm of Videocon and Tata Sky are also said to be looking to tap the IPO market.

Experts say that sentiments have improved after various reform measures announced by the government and the market regulator in the recent weeks, while an uptrend in the secondary market is also helping bringing companies to the market.

The companies that have filed their draft offer documents since September include Calyx Chemicals and Pharmaceuticals, Madhya Bharat Agro Products, SMC Global Securities, Bharti Infratel and G B Tools and Forgings.

Besides, RP-Sanjiv Goenka Group CESC said it will list Spencer’s by next year and the satellite TV broadcast services arm of Videocon Group’s Videocon D2H and Tata Group’s Tata Sky are also reportedly planning to hit the capital market shortly.

Most of the companies plan to utilise their proposed IPO proceeds for capacity expansion
as well as working capital requirements.

Sebi Chief U K Sinha recently said that the regulator has noticed renewed optimism about the economy and market.

Admitting that the IPO market has been very sluggish so far this year, Sinha said that a renewed interest was being noticed for past few weeks, giving an impression that people are optimistic and they are going to make investments.

“Current market conditions have turned favourable for companies planning to come out with IPOs mainly on account of various initiatives taken by the government,” the MD and CEO of Destimoney Securities, Sudip Bandhopadhyay said, adding, “Companies that withdrew their IPOs and companies that have not hit the capital market despite getting Sebi’s approval on subdued market conditions would definitely plan to go ahead.”

The buoyant conditions have also resulted in the Centre’s much-delayed divestment programme taking off in right earnest. The process is expected to commence shortly with the 9.33 per cent stake sale in MMTC that could net in Rs 7,000 crore.

 The government is planning to open the financial bids soon after the merchant bankers -- Avendus, IDBI capital Market Services Ltd and IDFC – make their presentation to the Inter-Ministerial Group (IMG) on November 8, officials said.

The divestment target for the current fiscal is about Rs 30,000 crore, which will reduce the Centre’s burgeoning fiscal deficit and consequently result in lesser borrowings, so that it does not crowd out private borrowers.

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