Indian companies raised Rs 44,153 crore (~$9 billion) through various equity and equity convertible tools (excluding private placements) in the first five months of 2009-10. This is almost three times the total fund raising through issue of equity for the whole of 2008-09 (Rs 16,254 crore ~ $ 3.3 billion).
The month of August continued to see healthy fund raising activity after a robust growth in issues in the first five months of the financial year. Although largely led by the Rs 6,000 crore IPO of NHPC, the month saw total fund raising of around Rs 14,000 crore.
Besides the big budget IPO of the public sector hydro power generator, various companies tapped on to the qualified institutional placement (QIP) route to raise money, either to retire high cost debt or to fund expansions.
According to latest data compiled by Prime Database, total funds raised through domestic equity issues (IPO/FPO, Rights, QIPs), has shot up 11 times in the first four months from Rs 2707 crore in April-August 2008 to Rs 30,048 crore in the same period this year.
This is largely led by QIPs which has registered a quantum jump after seeing virtually zero activity last year. Companies have raised as much as Rs 21,755 crore through the QIP route in the first five months of the financial year through 25 issues. Notably, companies have raised more than double the sum through QIPs in the first five months this year compared to Rs 9,131 crore during April-August 2007, when the markets were on the bull run.
Overseas issues (including equity as well as bonds) had seen significant pick-up in the first four months and although it wasn’t a big draw in August, in the first five months companies have raised Rs 12,505 crore through nine issues as against just Rs 1,411 crore through 14 issues for the whole of 2008-09.
Given some large issues in the pipeline including government owned oil firm OIL Ltd which is aiming to raise as much as Rs 2777 crore through IPO which opens for subscription next Monday, the quantum of funds going into primary market will only rise.
However, investors may be cautious in picking investment bets specially after the poor response of Adani Power and NHPC scrips post listing on the stock market. Since many high networth investors have burnt their fingers after financing shares for NHPC at grey market rates, it is to be seen whether they return back to let sail other slew of IPOs.