Pickup in primary market issues and the continuing tide of qualified institutional placements (QIP) has resulted in a four-fold jump in funds raised in India from domestic issues in the first seven months of the financial year (April to October) compared to same period last year.
The total funds mopped up from various equity and equity convertible tools (excluding private placements) has shot up to Rs 78,612 crore ($17 billion) after including overseas issues, according to data from Prime Database. The strong revival in QIPs could explain the lacklustre market for PE transactions.
The month of October alone has seen IPO/FPO worth Rs 2,250 crore against Rs 2,010 crore raised in the whole of FY09. Moreover, the total value of QIP in the first seven months at Rs 32,735 crore ($7 billion) has already beaten the funds raised through QIP in the entire last fiscal when companies raised Rs 25,770 at the peak of the bull run.
With some large issues in the pipeline such as Emaar MGF, D B Realty, Sahara Prime City, Hathway Cable, Reliance Infratel, Lodha Developers, Sterlite Energy, 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.
Total funds raised through domestic equity issues (IPO/FPO, rights, QIPs) shot up over four times in the first seven months from Rs 12,548 crore in April-October 2008 to Rs 50,726 crore in the same period this year.
Overall fund-raising last month was led by overseas issues (equity as well as bonds) with close to Rs 14,000 crore (almost the same amount was raised in the previous six months) being raised from the international market. This comes as a continuation of a pickup in international issues in the first half of the year against just Rs 1,411 crore through 14 issues for the whole of 2008-09.
Although there were no mega issues like the $1.2-billion IPO of NHPC in August, companies continued to float public issues and as many as 18 firms filed their draft prospectus for an IPO in October.
Notably, most issues have sailed through despite concerns that investors may turn cautious in picking bets after the poor response of Adani Power and NHPC post listing. October saw a close save for PE-backed Den Networks which managed to full subscription in the dying hours of the issue closing. For sustained improvement in market sentiments, retail investors and HNIs need to participate and the next batch of issues would set the tone for the overall sentiment for primary markets.