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Companies file for IPO  worth $2.6B despite second wave

Indian companies proceed to gear up for initial public offerings despite the covid-19 pandemic slowing down primary market activity.

Companies filed DRHPs for nine IPOs that intend to raise nearly ₹19,660 crore since 1 April 2021, as per data from primary market tracker Prime Database.

While 16 companies rolled out their IPOs in the first quarter of the year, there was only one listing—that of Macrotech Developers Ltd—in April.

According to bankers, companies that were working on their IPO plans have not paused and are advancing to file DRHPs so that they are ready when the second wave of the pandemic declines and markets are more favorable for IPOs.

“In the last three months, a very strong IPO pipeline has built up. The filings that we saw in the last few weeks are all companies that have been working on their draft prospectuses for the last three-six months. While work on new deals has gone a little slow, companies that were in advanced stages are not looking to defer their IPO plans and continuing to file the prospectus,” said a Mumbai-based investment banker, who requested anonymity.

“Given the ongoing second wave of the coronavirus pandemic, the market will remain choppy but there will be windows of opportunity to launch deals, as we saw in March when nine companies hit the IPO market,” the banker said. “So the idea is to file your document with the Securities and Exchange Board of India, get the regulator’s approval, and wait for the markets to stabilize to launch your deal. You want to keep yourself prepared so that when the window opens, you can move quickly and launch your IPO,” he added.

Companies that have filed their draft prospectuses with SEBI in the last few weeks include Zomato Ltd, which intends to raise ₹8,250 crore; Chemplast Sanmar Ltd, which plans to raise ₹3,500 crore, and Aditya Birla Sunlife AMC Ltd, which is planning to raise ₹2,000 crore.

“Many more companies are working on their documents and they will be filing soon,” said a lawyer advising a few companies that are working on their IPOs, urging anonymity.

“Due to the ongoing second wave, the regulator is also taking longer to clear IPOs. So people want to file as early as possible so that they can get an approval in time and be prepared to tap any opportunity that arises in the next few months,” he added.

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