IPO market braces for Omicron, US rate hike fallout

New Delhi, December 12, 2012 : .

While Paytms listing failure dampened sentiment, investors are now focusing their concerns on the Omicron variant of the IPO and potential interest rate increases by the US Federal ReserveAltius Investech CEO Sandip Ginodia stated that there has been no deferment in issues until now.

However, lower listings are possible.Ginodia stated that while sentiment is somewhat subdued, greedy promoters still make hay when the sun shines.

" Pranav Haldea (Managing Director, Prime Database) stated that 7-8 IPOs were already announced for December.Haldea stated that while Paytm was not a top-rated issue, there are still a few other issues.

However its not realistic to assume each IPO will bring a huge return.Haldea stated that IPOs after Paytm received strong subscriptions as well as strong listings.

Haldea says the biggest threat to IPO markets is Omicron, which has been detected.Also, theres the chance that the US Federal Reserve will raise its interest rate.

He stated that these will have an impact on the secondary market, which will in turn lead to slowdowns in the primary market.Holiday season is in the second half of December.

The quarters picture will be clearer in January depending on Omicrons impact.Haldea stated that the secondary market can be volatile and affects the IPO market.

Prime Database reports that nine new issues will open in December, raising Rs 7562 crore.Tega Industries and Anand Rathi Wealth are among them.

Rategain Travel Technologies, Shriram Properties as well as CE Infosystems, Metro Brands and Medplus Health Services.Data Patterns is also available.

Financial Times recently reported that Paytms listing crisis has raised concerns from entrepreneurs and investors, who fear that it will derail an expected string of Indian flotations, which were meant to consolidate Indias position as the countrys top destination for start-ups in tech after China and the US.

The debacle has put the spotlight on Paytm, its shareholders SoftBank and Alibaba, and bookrunners on the IPO including Goldman Sachs, Morgan Stanley and Citigroup, Financial Times reported."The worry for all of us is does this impact the broader India tech sentiment? One bad deal and one instance of bad judgment can upset the apple cart," said the head of equity capital markets for India at one western bank, as per the report.MobiKwik, an Indian fintech company, has delayed its IPO originally scheduled for November, saying this week that it will "list at the right time", the report said.

Ashneer Grover, the co-founder of fintech BharatPe, said Paytm had "spoiled" the Indian market.Sandeep Murthy, a partner at investment group Lightbox in Mumbai, said there may be "some period of cooling off" in fintech listings until early next year but argued that it was "natural", Financial Times reported.

Indian tech companies have raised a record $5bn through listings this year, according to Dealogic, about 10 times last years total.In a recent report, Jefferies said mobile wallets saw strong growth over FY16-19, but transaction growth has since slowed, due to a combination of KYC obligations that were imposed in FY20 and Covid-related impact in FY21.

The segment was also affected by transactions moving to UPI.The platform is currently annualising at $29bn worth of transactions, a relatively lower share in the overall retail digital payments segment, the report said.Indian fintechs have raised $28bn+ in capital since 2014, with a majority being raised by payment startups ($15bn) followed by lending platforms ($6.6bn).Insuretech has seen a pick-up in funding activity lately, while wealthtech segment has lagged in capital raising of late.Neobanks are a more recent phenomenon in India, with cumulative capital raise of $0.5bn.M&A has been higher in the payment gateway segment.A bunch of IPOs and with more in future will expand the Indian financial landscape, Jefferies said.