Firms line up IPOs worth Rs12,000 crore in March

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Mumbai: After a dull start to the year, activity in the initial public offering (IPO) market in India is expected to pick up pace with companies expected to raise more than Rs12,000 crore in the month of March.

The first two months of this year witnessed a total IPO fund-raising of Rs3,559 crore from six offerings, with February accounting for just two, data from primary market tracker Prime Database shows.

The IPO activity in March is expected to be led by companies such as state-owned fighter jet maker Hindustan Aeronautics Ltd (HAL), Bandhan Bank Ltd and ICICI Securities Ltd, according to at least four people aware of the developments.

These three companies together are looking to raise more than Rs12,000 crore, the people cited above said. Several other smaller IPOs are also expected to tap the primary market in March, they added.

Emails sent to HAL, Bandhan Bank and ICICI Securities did not elicit any response.

“February was a volatile month with several factors such as re-introduction of Long Term Capital Gains (LTCG) tax, the crash in the US market affecting stock market sentiment globally and thus there were hardly any trades. However, last few sessions have been positive for the market and if the markets are supportive then we could easily see at least 6-7 IPOs in March,” said one of the persons cited above, requesting anonymity as he is not authorized to speak to reporters.

India’s benchmark Sensex, which rose 6.37% in January, shed 1,460 points or 4.3% since the start of February to close at 34,436.29 on Tuesday.

Bandhan Bank, one of the two entities to receive a universal banking licence in 2015 and the only microfinance institution to do so, will raise over Rs4,000 crore through its IPO, said one of the persons cited above.

The IPO will see a dilution of around 10% stake, valuing the company at around at least Rs40,000 crore.

Apart from a fresh issue of up to 97.6 million shares, the Bandhan Bank IPO also consists of an offer for sale of up to 14.05 million shares by International Finance Corp. (IFC) and up to 7.56 million equity shares by IFC FIG Investment Co. IFC and IFC FIG collectively own 4.94% stake in the bank.

The initial share sale of Hindustan Aeronautics, which makes fighter planes such as MiG 21 and MiG-27, Jaguar, Su-30 MkI, among other aircraft, is a pure secondary offering that will see the Indian government dilute a 10% stake in the company.

HAL is engaged in the design, development, manufacture, repair, overhaul, upgrade and servicing of aircraft, helicopters, aero-engines, avionics, accessories and aerospace structures. As of 31 July, the order book of the company stood at Rs63,333 crore.

The IPO of ICICI Securities is also a pure secondary offering, which will see parent ICICI Bank Ltd sell a total of 64.42 million shares for around Rs4,500 crore, said two people cited above. The company offers financial services such as brokerage, financial product distribution, investment banking, merchant banking and advisory.

ICICI Securities will be the third company from the ICICI group to go public.

Last year, ICICI Lombard General Insurance Co. Ltd raised Rs5,700 crore in an IPO, the first public offering by an Indian general insurance company.

In 2016, ICICI Prudential Life Insurance Co. Ltd raised Rs6,000 crore in an initial share sale, the first public offering by an Indian life insurance company.livemint