Primary market to mop up Rs 75,000 cr

The primary market is expected to witness record fund-raising this year, thanks to a line-up of initial public offers (IPOs) and follow-on public offers (FPOs).

They will together mop up Rs 75,000 crore during this calendar year, according to Prime Database, the company that tracks the primary market.

While Rs 60,000 crore will be collected through IPOs, the remaining Rs 15,000 crore is expected to be raised through FPOs.

"This will be the highest-ever amount in a year, the previous highest being Rs 45,176 crore in 2007," said Prithvi Haldea, the chief of Prime Database.

According to Haldea, there is a huge appetite for Indian paper as almost all issues over the past three years have received huge oversubscriptions, reflecting the strength of the market. Public issues hitting the market have a good track record of established companies and promoters.

Starting off with Rs 10,125 crore from Reliance Power, other mega issues expected this year are Emaar MGF, UTI AMC, Sterlite Energy, JSW Energy and Oil India.

Interestingly, the big-sized IPOs, according to Haldea, will not be concentrated to one or two industry sectors, but would be across the board though dominated by power, real estate and financial services.

Leading the pack will be the power sector companies. Besides Reliance Power, there are IPOs lined up from Rural Electrification Corporation, NHPC, North Eastern Electric Power Corporation, Essar Power, Jaiprakash Power Ventures, JSW Energy and Sterlite Energy.

Another major sector, according to Prime Database, will be real estate and construction. There are already issues lined up from IRB infrastructure, J Kumar Infraprojects, KNR Constructions and SVEC Constructions (having already received the Sebi approval), with Emaar MGF, Gammon Infrastructure and Infinity Infotech Parks, among others.

There would hardly be any small issues. This, according to Prime, is not only because the market will not support such issues, but also because there are no investment bankers willing to take on small assignments, the entry barriers at BSE and NSE are very high along with a problem of low liquidity.

There was just one issue of less than Rs 10 crore in 2007, while 2006 had seen no small issue, while 2005 had seen only two such issues.

According to Haldea, if the Left softens its stand during the year, though it seems unlikely, several divestment issues of state-run companies could see the light of day.