Companies have raised nearly ₹1,000 crore via pre-initial public offering (IPO) placements so far this year the highest amount since 2017, since when the data is available.
Pre-IPO placements, typically conducted months before a maiden share sale, help establish a valuation base for an IPO and also instil confidence into investors about the company.
In the first nine months of 2023, 11 companies raised ₹960 crore from pre-IPO placements, according to the data from Prime Database, a primary market data tracker. Some of the companies that sold shares through such placements this year include SBFC Finance (₹150 crore), Yatharth Hospital (₹120 crore), Jupiter Life Line (₹123 crore), and Cyient DLM (₹108 crore).
While anchor allotments are done only a day ahead of an IPO, a pre-IPO placement can happenanytime before the IPO and after the filing of the draft red-herring prospectus (DRHPS).
Also, pre-IPO shares can be allotted at any price, unlike anchor allotment, which can only be sold within the IPO price band.
Investors subscribing to shares during pre-IPO placements must observe a six-month lock-in period post-listing.
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