Initial Public Offer Documents Filed & Awaiting SEBI Observations in 2024

Analysing the data on upcoming Initial Public Offerings (IPOs) reveals several insights about the current trends in the equity capital markets, the types of industries participating, the structure of offerings, the extent of promoter participation, and the allocations to different investor categories. Here’s a detailed analysis:

Type of Offerings

Fresh Issues and Offer for Sale (OFS): The majority of the IPOs listed (24 out of 33) are a combination of fresh issues and offer for sale. This indicates that many companies are not only raising new capital for growth but also providing an exit or partial exit for existing shareholders.

Only Fresh Issues: Only a few companies (6 out of 33) are opting for solely fresh issues, which means these companies are looking to raise capital purely for business expansion or operational needs without any current shareholders selling their stakes.

Only OFS: 3 companies are going for only an OFS, suggesting these are likely mature entities allowing promoters or early investors to reduce their holdings.

Industry Representation

The companies listed span various sectors, including engineering, textiles, infrastructure, finance, retail, technology, pharmaceuticals, and more. This variety indicates a healthy interest across different sectors in seeking public capital.

Promoter Holding

Promoter participation varies widely, with some companies showing 100% promoter holding pre-IPO, and others like One Mobikwik Systems with 34% with much lower percentages. High promoter holding generally indicates confidence by the founders in the company’s future, whereas lower percentages might suggest significant dilution or previous rounds of equity financing.

Lead Managers

A wide range of investment banks and financial services companies are managing these IPOs, with names like Axis Capital, ICICI Securities, and Kotak Mahindra Capital appearing frequently. The presence of multiple reputable lead managers indicates robust activity and competition in the IPO underwriting space.

Allocation Ratios

The typical allocation ratio for Qualified Institutional Buyers (QIB), High Net-worth Individuals (HNI), and Retail investors is either 50:15:35 or 75:15:10. This suggests a preference for either a balanced approach towards all types of investors or a skew towards either institutional investors or retail investors, based on the risk profile and outreach strategy of the IPO.

Date of Filing

The listings are spread across the early months of 2024, indicating a steady pipeline of companies going public. It’s also noticeable that there’s no clustering around specific months or quarters, suggesting that market conditions are perceived as stable or favorable across the year.

Following is the table of data the analysis is performed:

Data as of April 30, 2024

Conclusion

This upcoming batch of IPOs reflects a healthy and diverse financial ecosystem in which a variety of companies, from different industries, are seeking public capital for various reasons. The involvement of prominent financial institutions as lead managers also underscores the robustness of the market. The allocation ratios suggest that there is a conscious effort to balance or tilt the access to shares in favor of certain investor categories, possibly to manage market uptake and post-IPO stock performance. This spread of IPOs might attract a wide range of investors, promoting financial inclusivity and market growth.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.