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| Mid-sized I-banks reap rich haul in busy IPO season |
| Ashish Rukhaiyar / Mumbai Mar 20, 2010, 00:23 IST |
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Mid-sized investment bankers (i-bankers) are having a good time with the revival of the initial public offering (IPO) market, as small companies make a beeline to list on bourses. Industry players say most of the mid-sized investment banking entities are having their hands full, with some of them getting mandates from five-six firms.
Investment banking entities active in this arena include Anand Rathi Financial Services, PL Capital Markets, Saffron Capital Advisors, Collins Stewart Inga, Avendus Capital and Fortune Financial Services. According to these bankers, while the fee in absolute terms for such issuances are relatively low, a well-managed issue results in getting them more such mandates.
“The amount raised in such IPOs is small, so an investment banker also makes only a small amount,” says G S Ganesh, president, Collins Stewart Inga. “But, institutional investors do come in if they find the story interesting. Small and mid-sized issues cannot be a run-off-the-mill stuff,” he adds.
Collins Stewart, which is one of the lead managers of Intrasoft Technologies (which owns the website, 123greetings.com), has around six issues in the pipeline, all in the small- to mid-cap bracket.
Experts say the primary market will see a huge rush in the mid- and small-cap arena in coming months. Prime Database has listed at least seven companies planning an IPO of less than Rs 100 crore.
Apart from these, there are five issues in the range of Rs 100-200 crore. Industry players, however, say the number of such companies would grow exponentially if one takes into account the entities that have only filed their draft document with the market regulator and are yet to get the clearance.
Some of the smaller issues slated to hit the market in coming months, according to Prime Database, include Usher Echo Power (Rs 52.50 crore), Trinity India (Rs 60 crore), Sea TV Networks (Rs 50.20 crore), PSI (Rs 60 crore), Midvalley Entertainment (Rs 50 crore), Kabirdass Motor (Rs 61.28 crore) and Anita Knit Wear (Rs 25 crore). Issues in the range of Rs 100-150 crore include Argali Infrapower, AMR Constructions, Radiant Info Systems, PC Infratech and Manana Industries.
Bankers serving in this space feel investors find such issuances attractive, as these offers are priced in an attractive manner and also have a huge growth potential after their listing.
“Investors find these companies attractive, as they tend to price and trade at a discount to large-cap issues,” says Roy Rodrigues, head (investment banking), Anand Rathi Financial Services. Anand Rathi Financial Services has around 10 transactions in the kitty, including six IPOs.
“We have been quite active in the capital market this year. These companies tend to have higher growth characteristics, more focused management teams and simpler business models,” he explains.
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