Upcoming IPO,Startups,Stock Market • Dec. 23, 2022
IPOs to look forward to in 2023
What are IPOs?
An Initial Public Offering (IPO) refers to the process of offering shares of a company to the public for the first time through stock exchange for the first time. Main objective behind an Initial Public Offering is to raise funds in exchange for equity stake. The transition of a company from Private to Public can be a crucial period for private investors as it enables them to to fully realize their gains from investments as it generally includes a share premium for private investors.
Requirements to be met to issue an IPO:
Companies must meet the eligibility criteria laid down by Securities Exchange Board of India (SEBI) as well as requirements listed by both National Exchanges i.e Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) on which the entrepreneurs wish to list their shares. Companies usually hire Investment Banks to market their IPO and create awareness among the masses, gauge demand of its shares and set a price with an objective to get the best valuation for the shares.
How does an Initial Public Offering work?
Before an IPO, a company is considered private. As a Pre-IPO company the business focuses on establishing itself and growing on the back of Private investments being provided by a relatively smaller number of shareholders including Angel Investors, Venture Capitalists and even family, friends and close acquaintances. AN IPO is a very big step for any organization as it enables them to raise a lot of funds to fuel their expansion. Increased transparency along with share listing credibility are key reasons behind obtaining better terms when seeking funds.
Process of going Public:
The IPO process essentially consists of two parts- Pre-IPO Marketing and Initial Public Offering (IPO) launch process.
When a company reaches a stage of growth where it believes it meets all the eligibility criteria set by the securities regulator i.e SEBI and Stock exchanges along with benefits and responsibilities to shareholders, it starts showing interest in making their company public. Generally this stage occurs when an organization achieves 1 Billion $ worth valuation and achieves the unicorn status. However, companies with a strong foundation which includes its values and a sound management as well product profitability also tend to go for IPOs before reaching Unicorn status. These days, companies tend to go close to that target and go for seed funding rounds to achieve Unicorn status.
Finally, IPO shares of a company are priced through underwriting due diligence. The underwriters lead the IPO process and are chosen by the company. A company may choose one or multiple underwriters to manage different parts of the IPO process. Different segments of IPO include Due diligence, documentation, filing, marketing and issuance. When a company goes public, the previously private share ownership converts to public ownership and the existing private shareholder’s shares also become public. Meanwhile the public market opens huge opportunities for millions of investors to trade shares of their desired companies and contribute capital to shareholder’s equity.
Current status of IPOs in India:
The IPO movement is unlikely to halt with nearly 2000 Cr. worth of initial public offerings ready to hit the stock exchange next week, taking the number of IPOs in December to 5. So far, this year 36 IPOs have hit the market, raising over 60,000 crores successfully. In just last month itself, 2 IPOs have raised over 3800 Crores successfully which shows how buoyant investors are about investing in emerging start-ups.
Latest IPO news:
Kfin Technologies, a leading financial services company also got listed on Stock exchange. The company that provides solution to asset managers and corporate issuers across India aims to raise Rs. 1500 Crores via IPO which is an only Offer For Sale (OFS)
The Initial Public Offering (IPO) of electronics manufacturing services company Elin electronics received 37% subscription on the first day of offer that launched on Tuesday, 20 December 2022 and will conclude on 22 December 2022. The price range has been between Rs. 234 & Rs. 247 per share.
IPOs to watch out for in 2023:
Top Stock market analysts are expecting a good year ahead for IPOs. Over 85 IPOs are expected to be listed on the stock exchange, looking to raise over Rs. 1.4 Lakh crores. Some top start-ups who have become well established companies are expected to also get listed on the Stock exchange in 2023. The list includes giants like Swiggy, FabIndia, Oyo, Mankind Pharma who are expected to list themselves. Some other prominent IPOs include 2 from TATA Group- TATA Play and TATA Technologies, API Housing, Aadhar Housing Finance, TVS Supply Chain Solutions. Overall 2023 is expected to be a good year for IPOs and investors.