Top 4 IPOs To Buy In 2022
In recent months, IPOs (initial public offerings) have gotten a lot of attention. Private companies and startups sought to profit from the market’s upbeat investor sentiment.
In 2021 (through September), more than 40 companies will undertake initial public offerings, raising more than $700 billion.
Around 30 more IPOs are expected in the October-December quarter, including Paytm, a financial giant, and Policybazaar, an Insurtech startup.
The majority of these initial public offerings (IPOs) have been beneficial for investors and are currently trading at a premium to their issue price.
For example, Nureca, a provider of home healthcare and wellness products, has seen it’s stock rise over 300 per cent from its issue price of $400 to $1,738.
From its initial public offering price of $175 per share, Paras Defense’s stock has risen over 380 per cent to $846.
The remaining IPOs could see substantial demand if the market momentum continues and liquidity remains high.
This upward trend is projected to continue into the new year. In 2022, there will be four initial public offerings to look forward to.
Life Insurance Corporation of India (LIC)
The IPO of the state-owned Life Insurance Corporation of India is anticipated to take place in the fourth quarter of the fiscal year 2021-22.
With the government selling a 5-10% interest in the insurance company, the IPO is projected to be India’s largest-ever initial public offering.
For the government to fulfil its disinvestment aim, the listing will be critical. This IPO is expected to net the government between $600 billion and $800 billion.
The Life Insurance Corporation of India (LIC) is India’s largest life insurer, with significant financial reserves and a long history of trust.
It’s also the government’s most profitable corporation. The insurance made a stock market profit of roughly $100 billion between April and June 2021, according to a media report.
In addition, LIC has a significant market share of 49.8%. The remaining 50.2 per cent is held by 23 private companies, including HDFC Life and ICICI Prudential Life Insurance.
According to media sources, the extent of the share to be sold would be decided by a ministerial body termed the “alternative mechanism on strategic divestment.” It’s unlikely to be more than ten per cent.
The price band, the grey market premium, the exact issue size, and the face value of the IPO are yet unknown. As of now, it’s also uncertain when the IPO will take place.
Apart from that, the government is considering allowing foreign investors to buy up to 20% of LIC, allowing them to participate in the country’s largest IPO.
It’s debating a plan to change the laws on foreign direct investment (FDI) so that investors can buy a stake in a company without the government’s permission through the so-called automatic method.
Whatever happens, this is going to be the most important IPO of 2022.
Byju
Online education business Byju’s, India’s most valuable startup, is also in talks to raise money through an IPO next year.
It intends to raise between $400 million and $600 million.
In a few weeks, the Bangalore-based company is projected to conclude its pre-IPO funding at a valuation of over US$21 billion. It’ll almost certainly be split evenly between equity and debt.
Byju’s intends to file its initial IPO filings in the second quarter of next year, shortly after its fiscal year ends in March.
It had previously looked at a 12-to-24-month schedule after the financing.
According to sources, the business and its financiers are talking about a valuation of $40 billion to 50 billion dollars. Last month, Byju’s was valued at US$18 billion, up from US$16.5 billion in June 2021.
Facebook creator Mark Zuckerberg’s Chan-Zuckerberg Initiative, Naspers, Tiger Global Management, and private equity behemoth Silver Lake Management are among the investors in the online education startup.
Morgan Stanley, Citigroup, and JPMorgan Chase are among its bankers.
In the last year, Byju’s has acquired firms that provide coding lessons, professional learning courses, and test prep programmes for competitive Indian exams.
Last year, the corporation attracted 45 million pupils to its platform in India. In July 2021, the app had over 100 million users. 6.5 million of these were paid, customers.
The corporation stated that it expects to generate $100 billion (US$1.4 billion) in revenue in the fiscal year 2022, with a 20% profit margin.
Ola
Ola, a ride-hailing aggregator, is also considering a public offering in the first half of next year, intending to raise at least US$1.5-2 billion.
This puts the Bengaluru-based unicorn’s worth between $12 and $14 billion.
The company plans to raise half of its capital through the main offering and the other half through an offer for sale (OFS).
Ola is profitable, unlike most companies.
For the fiscal year 2021, the corporation reported a standalone operational profit of $898 million, compared to a deficit of $6.1 billion the previous year.
Despite revenue being down 65 per cent year over year owing to the pandemic, Ola made a profit, thanks to rigorous cost cuts and a workforce decrease.
Ola raised $500 million in what may be considered pre-IPO financing earlier this month. Along with two other private equity firms, Warburg Pincus and Temasek Holdings invested.
Ola also just announced the acquisition of GeoSpoc, a Pune-based geospatial firm with a six-year history. With GeoSpoc, the company aims to create the world’s next generation of location technology.
Delhivery
Delhivery, a logistics startup, has joined the list of tech companies planning to list next year.
The IPO is expected to raise between $400 and $500 million for the company.
The market regulator has already received its draught red herring prospectus (DRHP).
The IPO’s issue size is projected to be around $74.6 billion, with 50 billion coming from a fresh issue and 24.6 billion coming from an offer for sale.
China Momentum Fund (Deli CMF) – $4 billion, Carlyle – $9.2 billion, SoftBank – 7.5 billion, and Times Internet – 3.3 billion are among the existing shareholders who seek to sell their shares.
The company is estimated to receive a valuation of roughly US$5.5 billion as a result of the offering.
The revenues will be used to fund organic growth initiatives as well as inorganic growth activities such as acquisitions and other strategic projects.
Delhi recently agreed to buy 100 per cent ownership in Spoton Logistics, a competing express logistics company.
A resolution voted at the company’s Extraordinary General Meeting (EGM) on September 29, 2021, also distributed bonus shares to its shareholders.
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