Primary market gears up for action

A host of small and mid size companies are expected to tap the capital market with nearly 80-90 initial public offerings (IPOs) lined up to hit the primary market in 2005.

And the striking feature for this year' boom in IPO market will be that companies across various sectors including private and public sector banks, media, retail, consumer good, textile, telecom, financial services and pharma companies are expected to raise money through initial offerings.

According to data available from the Securities and Exchange Board of India (Sebi) website, 25 offer documents are pending with the market regulator at various stages of clearance.

These offers expect to raise Rs 3,994 crore. Issues worth over Rs 1,600 crore has already received Sebi's approval with the first to hit the market before the end of this month is Jet Airways with Rs 1,500 crore issue. Sources said, Jet issue will open on 18 February.

Jadgish Master, director, Enam Financial Consultants, said, "The IPO boom is expected to continue in 2005 with companies from different sector expected to raise money from the primary market, primarily for capacity expansion. Hopefully, there wont's be major bundling of issues from PSU's, thus complementing the secondary market well."

A senior executive with a domestic broking firm said, "On an average Rs 3,000-3,500 crore is expected to be mopped up every month with of lot smaller and mid size quality companies expected to tap the market in the next few month."

Among the mega issues in the pipeline, 27 are public sector undertakings, 10 public sector banks and seven media firms. Companies have lined up initial public offers to raise a whopping Rs 37,000 to Rs 39,000 crore over the next 12 months.

This is thrice the amount raised in 1995, the previous record year, as well as thrice of that raised in the primary market between 1997 and 2003. Nearly Rs 30,051 crore has been raised between January and December 2004.

Telecom space is expected to witness much action with six companies expected to raise over Rs 16,500 crore.

This includes Rs 10,000 crore Reliance Infocomm issue, through a mix of domestic and international offerings, BPL Communications is planning to raise Rs 500 crore though a mix of instruments, while Hutchison Essar Telecom is expected to raise Rs 1,500 crore and Tata Teleservices Rs 2,500 crore. Other prominent companies to tap the primary market include the Rs 150 crore UTV Software.