Prakhar Pandey, Founder and CEO of Moolaah, believes that the recent move by Sebi gives a strong message to merchant bankers to fully comply with the set of information required to furnish the draft prospectus, and disclose all material information required well in advance, rather than a complete back and forth between the bankers, IPO-bound firms and regulators.
Earlier, Sebi continued to give grace periods to most firms, to file their full set of compliant documents, which used to lead to a high gestation period, as high as four months as of last year. This could lead to a big distortion in terms of the IPO price band, he added.
So far this year, only nine companies have approached Sebi with their draft IPO papers amid extremely volatile market conditions and jittery investors' sentiments.
Moreover, only two companies - Divgi Torqtransfer Systems and Global Surfaces have floated their initial share sales to raise Rs 730 crore since the beginning of the year, while Udayshiv kumar's Rs 66 crore-IPO is slated to open next week.
This came after 38 companies collectively garnered close to Rs 59,000 crore through IPOs in 2022, which was much lower than Rs 1.2 lakh crore mopped up by 63 companies in 2021, which was the IPO year in a decade.
The overall collection in 2022 would have been much lower had it not been for the Rs 20,557 crore-LIC public offer, which constituted as much as 35 per cent of the total amount raised during the year.
Investors remained jittery throughout 2022 on recessionary fears and rising interest rates amid soaring inflation.
Experts believe that some activity on the IPO front could only be seen in the second half of financial year 2023-24.
"A host of factors like rising interest rates, a global banking crisis, FPI outflows, slow economic growth, taming inflation, and certain governance issues across large corporations with low earnings and high valuation multiples, are driving factors for the correction in the market.
"These challenges, once fully tackled, is when we might see private companies hitting public markets, probably in the second half of FY24, and existing IPO applications at Sebi might want to wait out this period of lull, to derail these pessimistic market sentiments," Pandey said.
Considering the turbulence in the market now, only attractively priced good companies will get a good response from investors, Geojit's Vijayakumar said.
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(Edited by : Sangam Singh)
First Published: Mar 19, 2023 1:57 PM IST
