The average size of initial share sale offers by Indian companies rose by 31% to Rs 827 crore in the April-November period of 2010, the Economic Survey said today.
The companies-- both private and public -- mopped up Rs 33,068 crore through 40 initial public offer (IPO) in the year 2010-11. Against this, the year 2009-10 saw 39 IPOs raising 24,696 crore.
"This mean IPO size of the current financial year is Rs 827 crore as compared to Rs 633 crore in the previous financial year, showing an increase of 30.6%," the survey said.
The IPO market was on fire after the decision of UPA government-II to dilute stake in PSUs as investors were waiting for these IPOs to test the primary market.
The government divested stake through IPOs in Coal India to mop up over Rs 15,000 crore.
With that issue size, the CIL IPO made history as the largest public issue so far in the Indian capital market, while issues of Powergrid Corporation, MOIL, Engineers India, Shipping Corporation and Satluj Jal Vidyut Nigam Ltd took the disinvestment proceeds to over Rs 22,000 crore.
More From This Section
"The year 2010-11 has seen the Indian capital market put the worst behind and move towards strong growth," the Survey said.
Besides the primary market, the business houses' appetite for fresh capital also declined as the total amount of capital raised by equity issues, including IPOs and rights issues, decreased to Rs 46,701 crore in 2010-11 from Rs 46,737 crore year-earlier.
While Rs 2,197 crore was mobilised through debt isues in 2010-11 as compared to Rs 2,500 crore in 2009-10.
The total amount raised through private placement of debt in 2010-11 was Rs 1.47 lakh crore, a 44% decline from Rs 2.12 lakh crore mobilised in 2009-10, the Survey said.
Further Indian companies have not garnered any fund through American Depository Receipts (ADRs) and Global Depository Receipts (GDRs).
Some analysts say that the revival in the secondary market is also playing a key role in the heavy rush of IPOs. The stock market managed to register decent gains with about 17% rally in the Sensex in the year 2010.
As per the prospectuses filed by private companies with the market regulator Sebi, there are 100 public issues in the pipeline with an indicative IPO size of about Rs 50,000 crore.
Of this, about 35 have already got Sebi's nod and are waiting to open the issue. The indicative size of these 35 issues is about Rs 35,000 crore. The remaining 65 issues worth Rs 15,000 crore are waiting for the Sebi clearance.
However, analysts feel pricing will remain key for the IPO market as appetite is intact in the market for fresh issues.