PE-backed IPOs ride on bulls

On Monday, when Godrej Agrovet listed at a 35 per cent premium to its offer price and closed lower, it marked a familiar trend. Initial public offerings (IPOs), backed by the private equity (PE) investors have done well on the bourses this year, thanks to the bull run on the stock market.
 
Several PE-backed IPOs have made strong debuts and sustained their price (see table). These include IPOs of Warburg-backed AU Small Finance Bank (up 65 per cent over its issue price), Motilal Oswal-backed Dixon Technologies (up 50 per cent), Paragon Partners-backed Capacit’e Infraprojects (up 37 per cent) and Quantum Funds-backed BSE (up 30 per cent).

Compiled by BS Research Bureau

 
But the IPO which has been a stellar performer is Reliance Equity-backed Shankara Building Products, listed at a 37.6 per cent premium to its offer price of Rs 460, and is currently trading at Rs 1465.90, a gain of 213 over its offer price.
 
‘‘The buoyancy in the IPO markets has been the main cause of the post-listing gains the stocks have seen,’’ says Sanjeev Krishan, leader, private equity, PwC India. ‘‘IPOs which have done well are from sectors such as financial services, banks and infrastructure services which have had favourable tail winds,’’ says Krishan.
 
Several PE-backed IPOs like Shankara Building, AU Small Finance Bank, and Tejas Networks have gained since listing. Tejas had a muted debut but has gained 17 per cent over its offer price. But it is not that all PE-backed IPOs have shone on the bourses.
 

Source: Venture Intelligence

At least half a dozen companies stocks, including SBI Life Insurance, ERIS Life Sciences, and Matrimony.com, have fallen after listing. Everstone-backed publisher S Chand & Co, has lost 31 per cent. C L Educate, backed by Gaja Capital, Granite Hill and IIFL VC, is down 28 per cent from its IPO price of Rs 417.90. SBI Life Insurance and ERIS Life Sciences are trading at 5 per cent below their offer prices.