IPO market revives, but fund raising in public equity falls in 2015-16

Fundraising of Rs 48,952 crore was raised, 17% lower than Rs 58,801 crore that was raised in the preceding year

Of the 24 initial public offerings (IPOs) in 2015-16 that raised Rs 48,592 crore, 20 companies had anchor investors who collectively subscribed to 31% of the total public issue amount, says a report by Delhi-based information management firm Prime Database.

As per the report, the domestic institutional investors (DIIs) played a significant role as anchor investors, with their subscription amounting to 14% of the amount, compared to 17% from FIIs.

Fund raising in public equity market registered a fall of 17% during the financial year 2015-16, though, the initial public offering (IPO) market has witnessed tremendous growth during the year, leading database company Prime Database said.

 

According to Prime Database report, fiscal 2015-16 has witnessed a raising of Rs 48,952 crore through the public equity markets, 17% lower than Rs 58,801 crore that was raised in the preceding year. The year could have been even better but for the deferment of several PSU offerings. The year fell way short of Rs 86,710 crore, the highest amount that has ever been raised in 2009-10.

"A major revival was witnessed in the IPO market after nearly four dismal years. Despite turbulent secondary markets, 24 main-board IPOs came to the market collectively raising Rs 14,461 crore as against Rs 2,770 crore with eight IPOs in the year 2014-15. The highest-ever mobilization through IPOs was in 2007-08 at Rs 41,323 crore," said Pranav Haldea, managing director of Prime Database.

The year also witnessed significant activity in the SME platforms where there were as many as 50 small and medium enterprises (SMEs) IPOs collecting Rs. 311 crore. Last year 38 companies had raised Rs 250 crore.

The response from public to the main board IPOs of the year, according to Prime, was good. While 7 IPOs received mega response, 3 other IPOs were oversubscribed by more than 3 times. The balance 11 IPOs, were oversubscribed between 1 to 3 times.

A notable feature of the year was that several companies that hit the market had a prior private equity (PE) and venture capital (VC) investment. This was true for 14 out of the 24 IPOs. Offers for sale by such PE and VC investors at Rs 2,891 crore accounted for 20% of the total IPO amount.

"Offers for sale through Stock Exchanges (OFS), which is for dilution of promoters' holdings, saw a huge decrease from Rs 26,935 crore raised last year to Rs 19,822 crore. 

This was almost entirely accounted for by the government's divestment at Rs 19,576 crore," said Haldea.

Of the total amount of Rs 48,952 crore, the amount raised through fresh capital was only Rs 21,441 crore; the remaining Rs 27,511 crore being offers for sale.

Further, mobilisation of resources through rights issues, according to Prime, recorded an increase in 2015-16. By amount, the period saw Rs. 9,239 crore being raised, which was higher by 37% than Rs. 6,750 crore that was raised in the preceding year. By number, the year witnessed 12 companies using the rights route against 17 companies in previous year.

Meanwhile, according to Haldea, 2016-17 looks promising with 25 companies wanting to raise over Rs 12,500 crore already holding SEBI approval at the beginning of the year and another 6 companies wanting to raise about Rs 30,000 crore awaiting SEBI approval. Many more filings are expected in the near future.


Fund Mobilisation in Public Markets

Year	IPOs	FPOs	OFS(SE)	QIPs	IPPs	IDRs	Total Equity	Bonds (Public)	Total (Equity + Bonds)
2009-10	24,948	21,993	0	39,768	0	0	86,710	2,500	89,210
2010-11	33,098	13,084	0	23,474	0	2,487	72,143	9,431	81,574
2011-12	5,893	4,578	13,518	1,713	471	0	26,172	35,611	61,783
2012-13	6,497	0	28,024	10,818	734	0	46,073	16,982	63,056
2013-14	1,205	7,456	6,859	9,402	4,459	0	29,381	42,383	71,764
2014-15	3,019	0	26,935	28,429	418	0	58,801	9,713	68,515
2015-16	14,772	0	19,822	14,358	0	0	48,952	33,812	82,764

Source: Prime Database. | Figures are in Rs crore