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IPO activity gaining momentum
Oct 21, 2015

The last couple of years had seen a dry spell in the IPO market. However, the current year so far has turned out to be good in this regard. Some statistics give an idea of the overall picture. According to Prime Database, there have been 16 new issues so far this year. This is much higher than the number of IPOs that had come during the years 2013 and 2014. A total of 8 companies raised money through IPOs in these two years...

While there is surge in the IPO activity, some private equity investors seem to be a dissatisfied lot.

As per an article in Economic Times, UK-based private equity (PE) fund Actis has entered into agreement with New Quest Capital, to sell its seven year old investment in NSE. The former had bought stake at Rs 1.78 bn and will be selling at around the same valuations at which it had acquired. Actis's decision to exit its holding came as a result of delay in the IPO listing. Private investors are of the view that regulatory and bureaucratic delays have been one of the reasons for PE funds exiting even without making profits.

The Indian regulator - Security Exchange Board of India (SEBI) - has been facing pressure regarding the IPO bottleneck since some time now. In most of the cases, it is PE funds and companies that benefit while retail investors end up burning their fingers.

In order to tighten the scrutiny of the IPOs, and protect the interest of the shareholders, the regulator has been taking longer time to approve the IPOs. While delay because of SEBI regulations may not go well with some PE firms, we believe it is a necessary check to protect the interest of retail investors to some extent.

Data Source: Business Standard, Prime Database

This Chart Of The Day was published in The 5 Minute WrapUp - Are Big MNCs Giving You a 'Royal' Ignore?

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