The current quarter is set to do down in the history of India’s capital markets for the highest ever amount of over Rs 26,000 crore being raised through initial and follow-on public offers. The government’s thrust on disinvestment, along with quite a few mid- and small-sized issues, saw the quarterly number breaching the earlier record that was set in the second quarter of calendar year 2007.
According to data from Prime Database, the first two months of the current calendar year saw Rs 15,751.22 crore being raised through initial public offers (IPOs) and follow-on public offers (FPOs). Incidentally, this does not include the mega FPO of NMDC and IPOs of IL&FS Transportation Networks, DQ Entertainment and Pradip Overseas. Collectively, these issues will raise nearly Rs 11,000 crore, pegging the quarterly mobilisation in excess of Rs 26,000 crore. This is significantly higher than the Rs 23,654 crore raised in the three months between April and June 2007.
According to the investment banking community, the record mobilisation can be attributed to the fact that companies initiated the process in the middle of last year and started hitting the market at quick intervals in the current quarter.
| ON A HIGH Quarterly amount raised through IPO/FPOs (Rs crore) | |
| Period | Amount raised |
| Jan-March 2010# | 26000 |
| Apr-June 2007 | 23654 |
| Jan-March 2004 | 15683 |
| Jan-March 2008 | 14917 |
| July-Sept 2009 | 12764 |
| (Source: Prime Database/Stock Exchanges) #Approximate amount | |
“The market started showing signs of recovery in mid-2009 and that is when many companies that were sitting on the sidelines initiated their IPO plans,” said Anil Ladha, head (capital markets), ICICI Securities. “All such companies are now opening their issues for subscription, leading to huge mobilisation,” he added.
While Ladha acknowledges that such a number would not have been possible without the three mega government offerings — NMDC, NTPC and REC — that collectively raised approximately Rs 22,000 crore, he is quite bullish on the private sector too. “We believe the private sector will raise around Rs 40,000 crore in the next financial year,” said Ladha.
Interestingly, Ladha is not alone in being bullish on private sector companies. Others also expect a number of mid-size offerings in the coming months on the back of impressive subscription numbers of some of the smaller IPOs. “You should expect to see several mid-market companies coming to the market this year,” said Roy Rodrigues, director (investment banking), Anand Rathi Financial Services. “Investors find these companies attractive as they tend to be priced and trade at a discount to the large caps. Additionally, these companies tend to have higher growth characteristics, more focused managements and simpler business models,” he said.
