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IPO Market Sees Revival In Its Worst Yr: Here's What Investors Can Expect
After the lacklustrous 2019 and in almost 8 months to 2020 end, IPO market may not only see more of first time sales through the route but investors are also likely to make huge listing. As we saw a huge demand for the latest IPOs i.e. for the Happiest Minds Techologies and Route Mobile, the former saw a bumper subscription to the tune of 151 times.
Why Investors' Rush For IPO subscription?
The latest IPOs saw a massive demand considering the good fundamentals of the company, management backing and rapid adoption of digital services by enterprises across verticals.
"The primary market is a preferred way to play new ideas and that is why there is a rush for public offers," said Mangesh Ghogre, executive director and the head of equity capital markets at Nomura India. "Investors believe there's upside in the primary market."
There remains expectation of raising $2 billion from the IPO market in the year 2020 that shall be the least since the year 2016, with the coronavirus outbreak.
In the previous year, S&P BSE IPO index which gauges shares in the first two years of their trading boomed 36% and Edelweiss Financial Services viewed the trend to continue.
And as expected earlier the revival in the IPO market shall be led by players from the financial institutions group or FIG including the likes of SBI Cards, UTI Asset Management Co, CAMS and Fincare Small Finance among others.
"There is a large appetite for good-quality papers at the right price from companies that have good governance, large businesses and leave some value on the table for the investors to make money," Edelweiss said.
Happiest Minds Technologies huge success signals momentum for IPO Market in 2020
In its worst year since 2020 with just few companies tapping the market, the gains of over 140% in the counter of Happiest Minds provide that the lost momentum in IPO market shall be revived and this is imminent with 2 more IPOs due for the next week of CAMS and Chemcon Specialty.
"Investors are looking for exciting stories that have an edge and can capitalize on the current disruption," said Amitabh Malhotra, head of investment banking at HSBC India. "We are seeing well-governed mid-cap companies come to the market across follow-on placements and IPOs."
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