Following the Paytm IPO debacle, Sebi has become more cautious in approving initial share sales, returning the preliminary papers of a half-dozen firms, including Oravel Stays, which manages the lodging chain OYO, in more than two months. Several firms have been invited to resubmit their draft red herring prospectus (DRHP) with changes.
The firms whose draft papers have been returned by the regulator are — Go Digit General Insurance, a firm backed by Canada-based Fairfax Group; home-grown mobile maker Lava International; B2B payments and services provider Paymate India; Fincare Small Finance Bank India; and integrated services company BVG India.
The six firms submitted preliminary initial public offering (IPO) papers with Sebi between September 2021 and May 2022, and their papers were returned between January and March of the following year.
One97 Communications, the parent company of digital payments business Paytm, debuted on the stock exchanges in November 2021 with a poor performance. After Coal India, the company’s Rs 18,300-crore IPO was the largest on Dalal Street. The shares of the digital payment startup was still trading 72 per cent below its IPO price.
Only nine businesses have approached Sebi with draft IPO papers so far this year, despite extremely volatile market circumstances and nervous investor mood.
Furthermore, only two businesses, Divgi Torqtransfer Systems and Global Surfaces, have raised Rs 730 crore through initial share offerings since the beginning of the year, while Udayshivkumar’s Rs 66 crore-IPO is set to launch next week.
This happened after 38 firms raised around Rs 59,000 crore through IPOs in 2022, which was significantly less than the Rs 1.2 lakh crore raised by 63 companies in 2021, which was the highest IPO year in a decade
The overall collection in 2022 would have been substantially lower if not for the Rs 20,557 crore-LIC public offer, which accounted for up to 35 per cent of the total revenue raised that year.
Investors remained nervous throughout 2022 due to recessionary fears and rising interest rates in the face of soaring inflation.