The Indian market has really not been IPO-friendly for last three years due to a variety of factors, says Pranav Haldea, managing director of Prime Database in an interview with Puneet Wadhwa. However, he expects them to pick up momentum in case the election outcome throws up a clear verdict. Edited excerpts:
Most market participants expect the secondary markets to continue their upward march post the election outcome. Do you think this could have a rub-off effect and pave the way for an improvement in the overall sentiment in the primary markets as well? Why or why not?
If the bullish run does continue in the secondary markets on the back of a clear verdict in the elections, surely a positive effect shall be seen in the primary markets, too.
Primary market boom usually comes around six months after the secondary market has either seen stability or a bull run. However, the effect has not yet been seen on the primary market because of the uncertainty on the political front.
The past couple of years have not been good for the primary markets. What has been the root cause for the way primary markets have panned out since the past few years?
We have continued to struggle primarily due to our own domestic concerns. The Indian market has really not been IPO-friendly for last three years due to a variety of factors. This includes overall poor sentiments, lack of investor appetite, secondary market volatility, promoters not getting the valuations they think they deserve, apprehensions of regulator's views on valuations, lack of appetite for equity of big-time issuers from the infrastructure sector, especially power, telecom and real estate, delays in clearing documents etc.
Do you see an increase in retail participation in the primary and the secondary markets going ahead? Why/why not?
Retail participation has been lacklustre in both the primary and secondary markets. Allocation of retail monies has moved to other asset classes, mainly real estate and gold. However, a continuing bull run may again see retail back in the markets, both primary and secondary.
Do you think that if the outcome of the election is according to what the opinion polls forecast, after the formation of the new government could see the divestment programme get back on track?
My view is that, yes, the disinvestment programme shall be back on track. However, we might see revival of strategic sales and privatisations, in addition to public issues.
Do you think the Wonderla's IPO was an aberration or is there enough appetite for fresh issues? How does the fresh issue pipeline look like?
Whether it was an aberration or otherwise can only be judged in the days to come. Many had hoped that the Bharti Infratel IPO or CARE IPO would signal the revival of the primary market. However, as we are aware, this was not the case and we had only one main board IPO of Just Dial in 2013-14.
On the other hand, what the huge over-subscription to the Wonderla IPO does show is that there is enough money for good quality paper at an attractive price.
As far as the fresh issue pipeline is concerned, there are 12 companies wishing to raise around Rs. 2,500 crore which are holding Sebi approval while another four companies wishing to raise another Rs 2,500 crore which have filed for Sebi approval. My expectation is that there shall be a big increase in this number on the back of a strong election result.
Most market participants expect the secondary markets to continue their upward march post the election outcome. Do you think this could have a rub-off effect and pave the way for an improvement in the overall sentiment in the primary markets as well? Why or why not?
If the bullish run does continue in the secondary markets on the back of a clear verdict in the elections, surely a positive effect shall be seen in the primary markets, too.
Also Read
The past couple of years have not been good for the primary markets. What has been the root cause for the way primary markets have panned out since the past few years?
We have continued to struggle primarily due to our own domestic concerns. The Indian market has really not been IPO-friendly for last three years due to a variety of factors. This includes overall poor sentiments, lack of investor appetite, secondary market volatility, promoters not getting the valuations they think they deserve, apprehensions of regulator's views on valuations, lack of appetite for equity of big-time issuers from the infrastructure sector, especially power, telecom and real estate, delays in clearing documents etc.
Do you see an increase in retail participation in the primary and the secondary markets going ahead? Why/why not?
Retail participation has been lacklustre in both the primary and secondary markets. Allocation of retail monies has moved to other asset classes, mainly real estate and gold. However, a continuing bull run may again see retail back in the markets, both primary and secondary.
Do you think that if the outcome of the election is according to what the opinion polls forecast, after the formation of the new government could see the divestment programme get back on track?
My view is that, yes, the disinvestment programme shall be back on track. However, we might see revival of strategic sales and privatisations, in addition to public issues.
Do you think the Wonderla's IPO was an aberration or is there enough appetite for fresh issues? How does the fresh issue pipeline look like?
Whether it was an aberration or otherwise can only be judged in the days to come. Many had hoped that the Bharti Infratel IPO or CARE IPO would signal the revival of the primary market. However, as we are aware, this was not the case and we had only one main board IPO of Just Dial in 2013-14.
On the other hand, what the huge over-subscription to the Wonderla IPO does show is that there is enough money for good quality paper at an attractive price.
As far as the fresh issue pipeline is concerned, there are 12 companies wishing to raise around Rs. 2,500 crore which are holding Sebi approval while another four companies wishing to raise another Rs 2,500 crore which have filed for Sebi approval. My expectation is that there shall be a big increase in this number on the back of a strong election result.