FY20 sees 62% spike in equity fundraising, over Rs 20k cr raised by IPOs

Coronavirus cloud looms over Rs 33,556-crore IPO pipeline

Financial year 2019-2020 (FY20) saw a 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 the qualified institutional placement (QIP) route. On Wednesday, PRIME Database released the data on primary market activity in FY20, while also pointing out that the IPO activity is expected to see sharp slowdown amid coronavirus outbreak.

As many as 26 companies — with approval from the 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 uncertainty around coronavirus ends,” said Pranav Haldea, managing director, PRIME Database group.

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

 

IPOs during the financial year saw strong appetite by institutional investors as well as retail investors.

“Unlike previous years, seven of the 13 IPOs are still trading above the issue price (between 8 and 207 per cent above the issue price, closing price as of March 31, 2020),” added Haldea.

QIP activity was up nearly fivefold, 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 were 28x the funds raised through this route in the 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.

Fundraising through public issuances of bonds saw 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 the light of concerns around non-banking financial companies, which frequently tap public markets for capital needs.