Given the sharp rally in stock prices since September, coupled with robust foreign inflows, share-sale activity by companies is likely to gather pace in the next few weeks.
According to investment bankers, initial public offerings (IPOs) could be some time away, but the market is likely to see an uptick in fast-track transactions like offer for sale (OFS), qualified institutional placements (QIPs) or block sales in the next few weeks, if conditions remain stable.
Already, bankers are sitting on a handful of mandates and are waiting for the right time to launch these deals. Most of these mandates are from companies wanting to pare their promoter holdings to below 75 per cent to meet the minimum public shareholding norms.
In the coming week, the market will see two OFS transactions, from Pioneer Distilleries and Xchanging Solutions. This is after Adani Power successfully managed to raise close to Rs 200 crore via the OFS route earlier this month. If stock exchange officials and investment bankers are to be believed, more such transactions are on their way.
“It (fund-raising activity) has already picked up, as a lot of blocks have happened, which is a first flush. Now you will see QIPs and OFS. There are some current mandates...the pipeline is robust,” said Manish Chokhani, managing director & chief executive officer, Axis Capital.
“We have already started contacting companies with promoter holdings of more than 75 per cent. A lot of them have shown interest in paring promoter holdings through the OFS route,” said a senior official with the Bombay Stock Exchange.
Recently, market regulator, Securities and Exchange Board of India (Sebi), directed stock exchanges to ‘carefully monitor’ and initiate a plan of action so that all listed companies comply with public shareholder requirements before next year's deadline.
According to bankers, a number of companies, which had earlier postponed stake-sale discussions, are now willing to come to the drawing board, as their share prices have rallied in the last one month. Also, the strong liquidity coming into the Indian markets has made it easier to conduct such share-sale transactions.
The benchmark BSE Sensex has risen 7.5 per cent since September to 18,682.31 and foreign institutional investors have pumped in $5.7 billion during this period.
At present, there are about 124 private companies with promoter shareholding of more than 75 per cent. These companies together will have to sell shares worth more than Rs 21,000 crore before June 2013 to meet the minimum public shareholding norm.
