After a brief pause, IPO season begins next week

The current sell-off in secondary markets isn’t deteriorating sentiment in the primary markets. Next week, two companies will hit the street to raise around Rs 5,700 crore through their maiden issues. FSN E-Commerce Ventures (Nykaa) will raise approximately Rs 5,400 crore and Fino Payments Bank will raise Rs 300 crore.

“The primary market is expected to start the celebrations before Diwali itself with a spree of IPOs expected to hit beginning from last week of October,” said Abhay Doshi of Unlisted Arena.

Besides these two companies market regulator Securities and Exchange Board of India (Sebi) recently gave the go-ahead to companies like PB Fintech (Policybazaar), Adani Wilmar, Star Health & Allied Insurance and One97 Communications, the parent company of fintech platform Paytm to launch their IPOs. In all, at least seven firms are looking to mop up over ~37,000 crore cumulatively.

SEBI recently gave a go-ahead for IPOs to companies like Paytm, Nykaa, Fino Payments, Policybazaar, Adani Wilmar and Star Health & Allied Insurance

“This leg of Primary Market will be amazing as lot of start-up biggies will tap the markets. Amongst the Fintech space, IPOs like Fino Payments Bank, PayTm, MobiKwik, PolicyBazaar are in the queue. Unlike typical start-ups having huge cash-burning business models, companies like Nykaa, Fino Payments Bank, Policy Bazaar are either profitable or expected to maneuver to profits quickly as they are well-positioned in their respective markets,” Doshi added.

From their peaks, the Sensex and the Nifty have both come off by a little over 2.5% and the decline has been sharper in mid- and smallcap indices, which have declined over 6% each from their highs.

Pundits on the street are of the opinion that the forthcoming large public floats could further put downward pressure on the markets as they will suck out liquidity. However, if we go by an example large issuances such as that of Zomato in July have had no impact on the secondary market.

The IPO of Nykaa, a beauty and wellness service, will open on October 28. It will be closed on November 1. Nykaa will raise Rs 630 crore out of Rs 5,400 crore through the primary issue. The rest of the money will be raised through Offer for Sale (OFS). The company plans to raise Rs 2,340 crore from anchor investors for whom the issue will open on October 27.

Likewise, the three-day public issue of Fino Payments will open on October 29 and close on November 02.