GoAir to Mobikwik: IPOs worth Rs 32,881 cr 'to expire' by Dec-end

Out of 27 such IPOs, the offer of GoAir will be the first one to expire

Public offers worth Rs 32,881 crore in India are set to expire at the end of December 2022. As API Holdings decided to call off the initial public offering (IPO) of its pharma delivery brand, Pharmeasy, it has come to light that 27 such companies will have to file a new draft red herring prospectus (DRHP) with the Securities Exchange Bank of India (SEBI) if they fail to launch an IPO in the next 4 months, Mint newspaper reported.

According to rules, a company is required to launch an IPO within 12 months of approval by the SEBI. During the pandemic, it was extended by six more months. However, the time period is back to being 12 months now. 

The IPO of GoAir will be the first one to expire. The IPO, which was aimed to raise Rs 3,600 crore, will expire on August 26. The company has not announced any date for the launch of the IPO as of August 22. 

In August and September, 5 public offers including Northern Arc Capital, Chemspec Chemicals and Shri Bajrang Power Ispat will expire, the Mint report added. 

"We are witnessing a considerable gap in the pace at which DRHPs are being filed versus the rate at which IPOs are being launched. Some DRHPs filed by the companies will expire soon so they will look to refile them," Mint quoted an an expert as saying. 

Another 22 will expire between October and December. These include Mobikwik, Gemini Edibles, Skanray Tech, Penna Cement, ESAF, Inspira Enterprises, Fusion Microfinance, Tracxn Tech, Puranik Builders, Keventer Agro, Global Health, Veeda Clinical, and GPT Healthcare. 

These 22 offers in total account for Rs 27,431 crore.

The main reason for this, as explained by an expert in the Mint report, is the fall in the valuations of these companies. The Reserve Bank of India (RBI) had earlier announced a funding cap of Rs 1 crore for high-net individuals. 

This led to a fall in the subscriptions and ultimately, a fall in the overall valuation of the offer. The companies were valued 25-40 per cent less than what the promoters had earlier thought, the report further said. 

So, now most promoters are unwilling to go forward with such valuations, leading to a slowdown in the IPO market.