Equity fundraising sees 62% spike in FY20; coronavirus could hit IPOs

The financial year 2019-2020 saw 62 per cent jump in equity fundraising, with Rs 20,350 crore of funds raised by initial public offerings (IPOs) and Rs 51,216 crore of funds raised by already listed companies through qualified investor placement (QIP) route.

On Wednesday, primedatabase.com released the data on primary market activity FY20, while also pointing out that the IPO activity is expected to see sharp slowdown amid the Coronavirus outbreak.

As many as 26 companies -- with approval from Securities and Exchange Board of India (Sebi) -- are looking to raise nearly Rs 26,056 crore from IPOs, while another six companies -- yet to receive Sebi nod --- have IPO fundraising plans of Rs 7,500 crore.

"It is highly unlikely that any of these issues will hit the market till the time the uncertainity around coronavirus ends," said Pranav Haldea, managing director of Prime Database group.

Overall, equity fundraising via various routes stood at Rs 91,670 crore in FY20, compared to Rs 56,485 crore in previous financial year.

IPOs during the financial year received strong appetite from institutional investors as well as retail investors. Experts attribute this strong listing gains seen by bulk of IPOs.

"Unlike in previous years, despite the ongoing coronavirus pandemic and its subsequent impact on the market, 7 of the 13 IPOs are presently still trading above the issue price (between eight and 207 per cent above the issue price, closing price as of March 31, 2020)", Haldea added.

QIP activity was up nearly five-fold, largely driven by issuances by Axis Bank (Rs 12,500 crore) and Bajaj Finance (Rs 8,500 crore).

Funds mopped up through rights issues surged to Rs 55,998 crore, which was 28-times the funds raised through this route in previous year. Large issues by debt-troubled telecom firms Vodafone Idea (Rs 25,000 crore) and Bharti Airtel (Rs 24,939 crore) largely contributed to the figure.

Fund raising through public issuances of bonds saw a 59 per cent decline in FY20. As many as 35 issues raised Rs 14,996 crore, compared to 20 issues raising Rs 36,788 crore last year. Market experts attribute it to waning investor appetite in light of concerns around non-bank financial companies, which frequently tap public markets for capital needs.