Soaked in the QIP tide, the Indian market witnessed a three-fold jump in equity fund-raising activity in the first half of 2009-10 compared to the whole of 2008-09.

Indian companies raised Rs 57,617 crore ($12 billion) through various equity and equity convertible tools (excluding private placements) in the first six months of 2009-10 against Rs 16,254 crore ($3.3 billion) in the entire last fiscal.

And, what’s more, given close to a dozen IPOs in the pipeline including Emaar MGF, DB Realty, Sahara Prime City, DEN Network, Hathway Cable, Reliance Infratel, Lodha Developers, Ashoka Buildcon, IL&FS Transportation Networks, the quantum of funds coming into the primary market will only rise. This could also bring exit opportunities for many PE-backed private firms.

According to data from Prime Database, total funds raised through domestic equity issues (IPO/FPO, Rights, QIPs), shot up three and half times in the first six months from Rs 12,420 crore in April-September 2008 to Rs 43,574 crore in the same period this year.

In fact, September continued to see healthy fund-raising activity after a robust growth in issues in the first five months of the financial year. Led by qualified institutional placements (QIP) worth over Rs 6,000 crore and the Oil India IPO, the month saw total fund raising of around Rs 13,500 crore, a little less than around Rs 14,000 crore raised in August.

Unlike the previous month which was dominated by the $1.2-billion IPO of NHPC, September was QIP-heavy with companies looking to raise money, either to retire high cost debt or to fund expansions.

Companies have raised Rs 27,832 crore through the QIP route in the first six months of 2009-10 through 34 issues. Notably, they have raised more than three times the sum through QIPs in the first six months this year compared to Rs 9,131 crore during April-September 2007, when the markets were on a bull run.

Overseas issues (equity as well as bonds) too has seen significant pick-up in the first four months. Although it was not a big draw in September (when Rs 1,500 crore was raised) in the first six months, companies have raised Rs 14,043 crore through 12 issues against just Rs 1,411 crore through 14 issues for the whole of 2008-09.

Most issues have sailed through despite concerns that investors may turn cautious in picking bets after the poor response of Adani Power and NHPC scrips post listing on the stock market. For sustained improvement in market sentiments, retail investors and HNIs need to participate and the next batch of issues would set the tone for overall sentiment for primary market.

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