IPO mandates of some major firms, including hospitality brands, quick commerce companies, private-equitybacked financial firms and real-estate brands, were closed after longer-than-normal pitching sessions.
Winning an IPO mandate is becoming a longer process for investment banks. Cautiouspromoters are extending IPO preparations, doing deeper due diligence and takingmore time to choose advisers, reflecting a shift in how companies approach publicmarket listings.
Investment banks pitching for equity capital market deals are facing a muchlonger wait to secure mandates. What was typically a six-to-eight-monthjourney from the first pitch to winning a mandate can now take up to a year, ascompanies adopt a more cautious approach to public listings amid volatilemarkets, according to industry executives.
Promoters are no longer treating the appointment of investment bankers as aroutine step for an initial public offering (IPO). Instead, they are taking more timeto prepare businesses for public markets and identify advisers with relevantsector expertise.
A combination of volatile global markets amid macro-uncertainty andunpredictable listing-day performance has altered their behaviour. Rather thanexecuting rapid public market debuts, issuers are expanding the scope ofpreliminary compliance, choosing to lengthen preparation periods in an effort toinsulate valuations against a selective investor base.
“Deal timelines from the first pitch to final closure have clearly stretched,” said K.Raghuram, accounting and reporting consulting partner at Uniqus Consultech.
Founded by former Big Four consultants, Uniqus helps companies in their IPOjourneys—from early-stage readiness to the public listing.
“What was typically a six-to-eight month journey from conceptualization toclosure is now often a 12-month process,” said Raghuram, without naming hisfirm’s active clients who are taking more time in giving mandates.
Mint has learnt that in the last six to eight months, IPO mandates of some majorfirms, including hospitality brands, quick commerce companies, private-equitybacked financial firms and real-estate brands, were closed after longer-than-normal pitching sessions.
“Winning mandates requires a deeper structural commitment these days,” said asenior Mumbai-based investment banker at a boutique firm, who wished toremain unnamed. “Till a few months ago, promoters would just rely on banks tocarry an asset through to the market. Nowadays, there is a demand forparticular bankers who have successfully handled specific issues before. In suchcases if they don’t find a banker that fits the profile, then pitches continue formonths.”
This banker said there are at least two pitches that have been in the market foreight to nine months and have not converted into secured mandates for thisparticular reason.
While extended conversion timelines are a cyclical feature of cooling equitymarkets, the current deceleration behaves differently than prior downturns.Historically, deal pipelines froze because promoters flatly rejected lower publicvaluations in banker pitches, halting the preparation process entirely untilbroader markets rebounded.
“Companies are using the longer window to genuinely prepare the business tooperate as a listed company and comply with the regulations that come with it.That means achieving a fast, reliable financial close, strengthening internalcontrols and settling governance and related-party matters well before theDRHP (draft red herring prospectus) is filed,” Raghuram explained. “Thepromoters treating this phase as preparation rather than delay are consistentlyseeing better listing outcomes.”
However, big issues such as those of the National Stock Exchange of India Ltdand Jio Platforms Ltd remained outliers to this trend, especially since theirsyndicate of banks included almost every major investment banking name in thecountry, leaving little room for any better options. These mandates werefinalized within a few weeks.
Jio and NSE have filed their offers against the backdrop of an IPO market that isquickly regaining momentum after a slowdown in the first half of the calendar year. SBI Funds Management Ltd, Zepto Ltd and Manipal Health are alsoexpected to launch their IPOs in the coming months.
Mint had reported on 24 June that investment bankers are preparing IPO roadshows for at least five to six private equity-backed firms, including KKR-backed InCred Holdings Ltd, Everstone-backed Integris Medtech Ltd and BainCapital-backed Dhoot Transmission Ltd.
Source: Mint
