Capital raising boom to continue

India incorporated is hoping for an encore this financial year (2005-06) after raising record money last fiscal.

Corporates mobilised Rs 25,506 crore in financial year 2004-05 through 34 public issues of equity and debt. Of this, Rs 21,393 crore was raised via equity initial public offerings (IPOs) and FPOs, while Rs 4,113 crore was raised via debt , according to data from Prime Database.

Corporates had raised Rs 22,145 crore in 2003-04 via 35 issues and market entities are hoping the trend continues in this year too. The last fiscal witnessed many big ticket equity public offerings such as TCS, NTPC, Jet Airways and the PNB secondary offer.

Rajesh Kamdar, dealer at K G Vora Securities, said, "The last financial year was extremely good for small investors because they made a lot of money by investing in public offerings of some big companies such as NTPC and TCS. This allowed them to not only buy good quality shares at fair prices but also get a good price realisation on listing."

The raising of investment limits of retail investors to Rs 1 lakh (and 35 per cent of issue size) is very positive and the small investors are looking forward to offerings from the government (disinvestment plan) and other good public offerings, he added.

Mobilisation of resources through rights issues also recorded a significant rise in the recently concluded financial year 2004-05. According to data from Prime Database, the year saw a 259 per cent rise over the last financial year (Rs 1,006 crore) to Rs 3,616 crore being raised this year.

But 2004-05 mobilisation was still only 29 per cent of the Rs 12,630 crore which was raised in the boom year of 1992-93. The largest issue in the year was from Sterlite Industries (Rs 1,972 crore).

Prithvi Haldea, managing director of Prime Database, said that rights offers are made at a discount to the ruling market price and hence are able to draw in shareholders' response especially when the secondary market is doing well.