Initial Public Offerings–Unlocking Values of a Company
“Trends indicate that a number of initial public offerings (IPO) hitting the market this year are high. The valuations are high as investor sentiment is positive and expectation is that economy would rebound with vigour as the second wave of COVID – 19 is over. CFOs are more sought after resource during IPOs and are being offered handsome remuneration alongwith wealth creating esops. Read on…”
1 What is an IPO & Strategic Rationale for Going Public
An Initial Public Offer (IPO) is an event where the intrinsic value of an Issuer or Company is unlocked. Typically, an IPO is carried out when the valuation of the business reaches at least INR 1,000 Crore so as to attract institutional and retail investors’ interest. It represents that mature stage of corporate growth where the organisation is capable of facing the rigors of the Securities and Exchange Board of India (SEBI) Issue of Capital and Disclosure Requirements (ICDR) Regulations, 2018 (as amended), assuming the duties and responsibilities owed to public shareholders.
Primary vs. Secondary Offerings (Offer for Sale)
An IPO structure generally combines two kinds of issuances:
- Primary Issue: Fresh equity shares are issued by the Company, and the proceeds flow directly into the corporate treasury to fund capital expenditures, debt retirement, or strategic growth.
- Secondary Issue (Offer for Sale – OFS): Existing shareholders (promoters, private equity, or venture capital investors) sell their existing shareholding to new investors without fresh capital entering the company. Complete secondary offers have been exceptionally well received by modern markets.
2 Evolution of Indian Capital Market Regulations: CCI to SEBI ICDR 2018
Prior to SEBI, capital issues in India were governed by the Capital Issues (Control) Act, 1947 (CCI). The Controller of Capital Issues determined both the quantum and the issue price of shares based on rigid historical net asset formulas, aimed at preventing corporate overcrowding and aligning private investments with national Five-Year Plans.
SEBI originally issued its Disclosures and Investor Protection (DIP) Guidelines, which were formally codified in 2009 as the SEBI (ICDR) Regulations, 2009, and subsequently overhauled into the contemporary SEBI (ICDR) Regulations, 2018 (as amended).
3 The End-to-End IPO Process & Corporate Governance Mandates
1. Preparation, Merchant Bankers & Intermediaries
The senior management prepares a 5-year business plan and engages SEBI-registered Merchant Bankers (Lead Managers) who conduct extensive due diligence and ensure ICDR compliance. Other critical intermediaries on-boarded include domestic and international legal counsels, statutory auditors, industry experts, advertising agencies, Registrars to the Issue, and financial printers.
2. Governance Architecture under SEBI (LODR) Regulations, 2015
Before filing the offer document, the issuer must reconstitute its Board of Directors and establish mandatory board committees with a majority of Independent Directors:
3. Offer Documents Lifecycle: DRHP → SEBI CARD → RHP → Prospectus
- Draft Red Herring Prospectus (DRHP): Filed with SEBI for review, containing business, financials, and risks, but omitting price and issue size. Vetted by lawyers and backed by Lead Managers’ Due Diligence Certificate (Form A, Schedule V).
- SEBI CARD (12-Month Validity): SEBI reviews DRHP, receives clarifications, and issues observation letter (“SEBI CARD”), valid for 12 months to launch the public offering.
- Red Herring Prospectus (RHP): Updated with latest financials and filed with SEBI/ROC, containing price band / floor price.
- Final Prospectus: Filed with ROC after book-building closure, containing final discovered issue price and allotment quantum.
4 Schedule VI DRHP Disclosures & Statutory Auditor Certifications
Seventeen Core Disclosure Sections under Schedule VI
Statutory Auditor Certification & Comfort Suite (Points 1 to 15)
5 Investor Quotas, Bidding Windows & Post-Listing Compliance
Reserved quota of at least 35% of the net issue allocated to retail individual investors bidding up to INR 2 Lakh.
Reserved quota of 15% allocated to High Net-Worth Individuals and corporate non-institutional bidders.
Allocated up to 50% to institutional investors having net worth exceeding INR 500 Crore registered with SEBI.
Listing Formalities: Issuer applies for in-principle approval under Regulation 28 of SEBI (LODR), completes pre-listing formalities within 21 days from allotment, and executes the formal Listing Agreement.
6 Performance of 49 Public Offerings (Over INR 87,000 Crore Raised)
More than INR 87,000 Crore was mobilized from capital markets between January 2020 and August 2021. The complete performance matrix across 49 offerings is presented below:
| Date | IPO Name | Issue Size (Cr) | Issue Price | Open | Close | Listing Gain % | Price (26-Aug-21) | Current Gain % |
|---|---|---|---|---|---|---|---|---|
| 23-08-21 | Nuvoco Vistas | 5,089.29 | 570 | 471.00 | 531.30 | -6.79 | 527.45 | -7.46 |
| 20-08-21 | CarTrade Tech | 2,998.00 | 1,618 | 1,600.00 | 1,500.10 | -7.29 | 1,429.05 | -11.68 |
| 16-08-21 | Windlas Biotech | 405.95 | 460 | 439.00 | 406.70 | -11.59 | 344.45 | -25.12 |
| 16-08-21 | Devyani Int | 1,858.00 | 90 | 141.00 | 123.35 | color: #059669;">37.06 | 112.05 | color: #059669;">24.50 |
| 16-08-21 | Krsnaa Diagnost | 1,222.00 | 954 | 1,025.00 | 990.75 | color: #059669;">3.85 | 905.15 | color: #dc2626;">-5.12 |
| 16-08-21 | Exxaro Tiles | 161.09 | 120 | 126.00 | 132.25 | color: #059669;">10.21 | 125.70 | color: #059669;">4.75 |
| 08-09-21 | Rolex Rings | 732.27 | 900 | 1,249.00 | 1,166.55 | color: #059669;">29.62 | 1,100.00 | color: #059669;">22.22 |
| 08-06-21 | Glenmark Life | 1,513.00 | 720 | 752.00 | 748.20 | color: #059669;">3.92 | 670.75 | color: #dc2626;">-6.84 |
| 29-07-21 | Tatva Chintan | 500.00 | 1,083 | 2,111.80 | 2,310.25 | color: #059669; font-weight: 700;">113.32 | 2,129.70 | color: #059669; font-weight: 700;">96.65 |
| 23-07-21 | Zomato | 9,375.00 | 76 | 115.00 | 125.85 | color: #059669;">65.59 | 125.85 | color: #059669;">65.59 |
| 19-07-21 | Clean Science | 1,546.00 | 900 | 1,784.40 | 1,585.20 | color: #059669;">76.13 | 1,426.05 | color: #059669;">58.45 |
| 19-07-21 | G R Infra | 963.28 | 837 | 1,700.00 | 1,746.80 | color: #059669; font-weight: 700;">108.70 | 1,577.35 | color: #059669; font-weight: 700;">88.45 |
| 07-07-21 | India Pesticide | 800.00 | 296 | 360.00 | 335.45 | color: #059669;">13.33 | 308.70 | color: #059669;">4.29 |
| 07-05-21 | Krishna Inst. | 2,146.00 | 825 | 1,009.00 | 1,096.80 | color: #059669;">32.95 | 1,288.65 | color: #059669;">56.20 |
| 28-06-21 | Dodla Dairy | 521.00 | 428 | 550.00 | 609.10 | color: #059669;">42.31 | 554.60 | color: #059669;">29.58 |
| 24-06-21 | Shyam Metalics | 909.00 | 306 | 380.00 | 375.85 | color: #059669;">22.83 | 385.10 | color: #059669;">25.85 |
| 24-06-21 | Sona BLW | 5,550.00 | 291 | 302.40 | 362.85 | color: #059669;">24.69 | 471.70 | color: #059669;">62.10 |
| 14-05-21 | PowerGrid InvIT | 7,734.99 | 100 | 104.00 | 102.98 | color: #059669;">2.98 | 122.22 | color: #059669;">22.22 |
| 19-04-21 | Macrotech Dev | 2,500.00 | 486 | 439.00 | 463.15 | color: #dc2626;">-4.70 | 869.00 | color: #059669; font-weight: 700;">78.81 |
| 04-07-21 | Barbeque Nat | 453.60 | 500 | 492.00 | 590.40 | color: #059669;">18.08 | 1,088.00 | color: #059669; font-weight: 700;">117.60 |
| 30-03-21 | Nazara | 582.91 | 1,101 | 1,971.00 | 1,576.80 | color: #059669;">43.22 | 1,686.75 | color: #059669;">53.20 |
| 26-03-21 | Suryoday Small | 582.34 | 305 | 274.75 | 276.20 | color: #dc2626;">-9.44 | 156.70 | color: #dc2626; font-weight: 700;">-48.62 |
| 26-03-21 | Kalyan Jeweller | 1,175.00 | 87 | 73.90 | 75.30 | color: #dc2626;">-13.45 | 62.95 | color: #dc2626;">-27.64 |
| 25-03-21 | Craftsman | 823.70 | 1,490 | 1,440.00 | 1,433.00 | color: #dc2626;">-3.83 | 1,927.70 | color: #059669;">29.38 |
| 25-03-21 | Laxmi Organic | 600.00 | 130 | 173.00 | 164.60 | color: #059669;">26.62 | 382.35 | color: #059669; font-weight: 700;">194.12 |
| 24-03-21 | Anupam Rasayan | 760.00 | 555 | 534.70 | 525.90 | color: #dc2626;">-5.24 | 736.10 | color: #059669;">32.63 |
| 19-03-21 | Easy Trip | 510.00 | 187 | 182.00 | 208.30 | color: #059669;">11.39 | 437.00 | color: #059669; font-weight: 700;">133.69 |
| 15-03-21 | MTAR Tech | 596.41 | 575 | 990.05 | 1,082.25 | color: #059669; font-weight: 700;">88.22 | 1,266.45 | color: #059669; font-weight: 700;">120.25 |
| 03-05-21 | Heranba | 60.00 | 627 | 900.00 | 812.25 | color: #059669;">29.55 | 786.15 | color: #059669;">25.38 |
| 26-02-21 | Railtel | 819.24 | 94 | 109.00 | 121.40 | color: #059669;">29.15 | 125.80 | color: #059669;">33.83 |
| 25-02-21 | Nureca | 100.00 | 400 | 634.95 | 666.65 | color: #059669; font-weight: 700;">66.66 | 1,589.85 | color: #059669; font-weight: 700;">297.46 |
| 02-05-21 | Stove Kraft | 412.63 | 385 | 498.00 | 445.95 | color: #059669;">15.83 | 820.50 | color: #059669; font-weight: 700;">113.12 |
| 02-03-21 | Home First | 1,153.72 | 518 | 612.15 | 527.40 | color: #059669;">1.81 | 559.65 | color: #059669;">8.04 |
| 02-02-21 | Indigo Paints | 1,170.56 | 1,490 | 2,607.50 | 3,118.65 | color: #059669; font-weight: 700;">109.31 | 2,533.00 | color: #059669; font-weight: 700;">70.00 |
| 29-01-21 | IRFC | 4,633.00 | 26 | 25.00 | 24.85 | color: #dc2626;">-4.42 | 22.90 | color: #dc2626;">-11.92 |
| 01-01-21 | Antony Waste | 300.53 | 315 | 430.00 | 407.25 | color: #059669;">29.29 | 340.65 | color: #059669;">8.14 |
| 24-12-20 | Bectors Food | 540.54 | 288 | 501.00 | 595.55 | color: #059669; font-weight: 700;">106.79 | 394.00 | color: #059669;">36.81 |
| 14-12-20 | Burger King | 796.50 | 60 | 115.35 | 138.40 | color: #059669; font-weight: 700;">130.67 | 170.20 | color: #059669; font-weight: 700;">183.67 |
| 20-11-20 | Gland | 6,479.55 | 1,500 | 1,710.00 | 1,820.45 | color: #059669;">21.36 | 3,879.30 | color: #059669; font-weight: 700;">158.62 |
| 11-02-20 | Equitas Bank | 517.60 | 33 | 31.00 | 32.75 | color: #dc2626;">-0.76 | 58.50 | color: #059669; font-weight: 700;">77.27 |
| 10-12-20 | UTI AMC | 2,159.88 | 554 | 476.20 | 476.60 | color: #dc2626;">-13.97 | 1,144.50 | color: #059669; font-weight: 700;">106.59 |
| 10-12-20 | Mazagon Dock | 443.69 | 145 | 216.25 | 173.00 | color: #059669;">19.31 | 233.80 | color: #059669;">61.24 |
| 10-05-20 | Angel Broking | 600.00 | 306 | 275.00 | 275.85 | color: #dc2626;">-9.85 | 1,106.00 | color: #059669; font-weight: 700;">261.44 |
| 10-01-20 | Chemcon Special | 318.00 | 340 | 731.00 | 584.80 | color: #059669; font-weight: 700;">72.00 | 441.15 | color: #059669;">29.75 |
| 10-01-20 | CAMS | 2,244.33 | 1,230 | 1,535.00 | 1,401.60 | color: #059669;">13.95 | 3,241.05 | color: #059669; font-weight: 700;">163.50 |
| 21-09-20 | Route | 600.00 | 350 | 708.00 | 651.10 | color: #059669; font-weight: 700;">86.03 | 1,912.00 | color: #059669; font-weight: 700;">446.29 |
| 17-09-20 | Happiest Minds | 702.02 | 166 | 351.00 | 371.00 | color: #059669; font-weight: 700;">123.49 | 1,436.75 | color: #059669; font-weight: 700;">765.51 |
| 23-07-20 | Rossari | 496.25 | 425 | 670.00 | 742.35 | color: #059669; font-weight: 700;">74.67 | 1,320.05 | color: #059669; font-weight: 700;">210.60 |
| 16-03-20 | SBI Card | 10,286.20 | 755 | 658.00 | 683.20 | color: #dc2626;">-9.51 | 1,088.40 | color: #059669;">44.16 |
7 Closing Thoughts: Macro Signals, Retail Demat Surge & CFO Leadership
The broader economy and equity markets are demonstrating divergent dynamics. While macro economists repeatedly moderate GDP estimates, stock markets continue scaling record peaks, propelled by immense domestic liquidity and retail investor enthusiasm. Over 1 Crore new Demat accounts were opened in the initial months of the pandemic, catalyzed by digital onboarding, low-cost discount brokerages, and prolonged lockdowns.
In parallel with conventional IPOs, alternative financing structures such as Real Estate Investment Trusts (REITs), Infrastructure Investment Trusts (InvITs), and Special Purpose Acquisition Companies (SPACs) are commanding significant institutional capital.
The Transformational Role of the Modern CFO
The CFO shoulders unparalleled responsibility and accountability throughout the IPO lifecycle – orchestrating restatements, financial closures, regulatory interfaces with SEBI, and investor relations. With adequate delegation of authority, a well-rounded, intellectually courageous, and business-facilitating CFO transitions into the public face and authoritative spokesperson of the Issuer.