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IPOs Stuck: No Peers, No Price!
4 Jun
Summary
- Three financial IPOs worth ₹3,700 crore are delayed pending investor education.
- Absence of listed domestic peers creates pricing benchmark challenges for IPOs.
- Bankers aim to avoid a repeat of Fractal Analytics' IPO issues.
Three initial public offerings (IPOs) in the financial sector, collectively valued at ₹3,700 crore, are currently unlaunched. These Sebi-cleared offerings from Arcil, EAAA, and Gaja are experiencing extended marketing phases due to investor education efforts.
Bankers are conducting thorough roadshows to explain the distinct business models of these firms to institutional investors. This is necessary because there are no directly comparable listed domestic companies, creating a challenge in establishing valuation metrics.
The delay is partly influenced by the performance of Fractal Analytics' IPO earlier this year, which was reduced in size and saw modest demand due to similar valuation concerns.
All three companies possess sufficient financial stability to await favorable market conditions, with no fixed launch timelines set. The current strategy emphasizes building demand from domestic mutual funds, reflecting a broader trend where institutional investors are increasingly guiding IPO pricing and timing.
Arcil's IPO aims for up to ₹1,500 crore, EAAA also targets a similar amount, and Gaja is seeking around ₹700 crore. The regulatory approval for these IPOs is valid for a 12-month window from Sebi's observation letter.
