The specialty chemicals sector is experiencing a fundraising frenzy as several companies seek to exploit investor exuberance following the successful IPO of Rossari Biotech in July.
Rossari Biotech’s IPO was subscribed nearly 80 times when it was opened for subscription, followed by a more than 60% increase in its share price when it debuted.
Investors are looking to bet on these specialty chemical makers as the sector is expected to benefit greatly from global geopolitical and trade tensions, which are leading many global companies to adopt a “China plus one” strategy for their supply chains. Indian chemical companies are expected to benefit greatly from these changes in global supply chains.
Companies looking to tap the markets in the coming months to raise funds include SRF Ltd, which has obtained board approval for a ₹Qualified Institutional Placement Offer (QIP) of 750 crore.
“They could lift around ₹500 to 600 crore via QIP, or all ₹750 crore, depending on investor appetite. Investment bank Kotak Mahindra Capital advises the company on the sale of shares. They have yet to get shareholder approval for the fundraising, and the operation could be launched immediately afterwards, ”said one person familiar with the developments.
Many more are planning to enter the market with their initial stock sales.
According to media reports, Chemcon Specialty Chemicals is likely to launch its ₹350 crore IPO this month. Others, like Surat-based Anupam Rasayan and Mumbai-based Laxmi Organic Industries have appointed investment banks and started preparations for their IPO. “Laxmi Organic seeks to increase ₹750 crore from its IPO. She hired Axis Capital and IDFC Securities to handle the IPO, ”said a second person familiar with the company’s plans.
Emails sent to Anupam Rasayan, Laxmi Organic Industries, Kotak Mahindra Capital and Axis Capital did not elicit a response. IDFC Securities declined to comment.
A spokesperson for SRF said: “The company has passed an enabling resolution for the issuance of equity up to ₹750 crore. The required regulatory approvals are currently requested, which should be received in due course. We will contact the media at the appropriate time. “
According to brokerage firm Axis Securities, India has gained global market share in specialty chemicals due to its capabilities in the sector and the realignment of the supply chain from China to India. “We believe Indian companies could gain traction as companies want to reduce their dependence on China after the pandemic and change their supply chains,” he said in a September 3 report.