Third brokerage IPO to hit mkt soon

The sharp stock market rally, which has nearly doubled investors' wealth to over Rs 62 trillion in past one year despite the recent downslide, is leading to robust business growth for brokerage houses, leading them to tap the market itself to raise funds.

In a span of less than three months, the primary market would see the third IPO by a brokerage firm on Thursday when the public issue of Edelweiss Capital opens for subscription.

This follows successful IPOs by Motilal Oswal Financial in August and Religare Enterprises in October-November.

The two public issues mopped up close to Rs 400 crore together, while Edelweiss alone is planning to raise an estimated Rs 700 crore through its IPO. Both the IPOs generated robust investor demand with Religare issue getting subscribed by over 160 times, while that of Motilal Oswal was subscribed by about 28 times.

The total demand generated by the two IPOs was worth about Rs 30,000 crore, measured in terms of collective value of all the bids submitted in their book-building processes.

The huge demand for these IPOs has been justified by the performance of already-listed brokerage firms on the bourses, said an analyst. Motilal Oswal Financial got listed at Rs 999 on the BSE on September 11 with a premium of 21.09 per cent over its issue price of Rs 825.

Religare Enterprises, a Ranbaxy promoter group company, has fixed the offer price of its initial public offer (IPO) at the higher end of its price-band of Rs 160-185.

The other brokerages already listed on the bourses include Indiabulls Financial Services, Emkay Share and Stocks Brokers Ltd, Almondz Capital & Management Services Ltd, India Infoline, IL&FS Investmart and Geojit Financials.