Indian companies raised a record Rs 71,100 crore through public issue activities
BY Siddharth Kumar
Delhi
Going public was never as exciting in one calendar year as it was in 2010 for Indian companies that raised a record Rs 71,100 crore.
The last year of the passing decade, which many Dalal Street pundits term a golden period for public issue activities, would certainly be remembered for setting many records in Indian primary market history.
And if everything goes well with the Indian economy and global markets, the crazy debut saga of India Inc is unlikely to stop here as along with the Centre's ambitious disinvestment plan, there is a big pipeline of papers from private players for the next year, experts say.
"This year (2010) clearly can be termed as a hot period for fund-raising activity through the primary market. This journey is likely to continue with the same pace, if India's growth story does not slows," said Prithvi Haldea, chairman and managing director of Prime Database, which tracks the primary market.
The outlook for new issues seems bullish for the coming period as the government is focusing on modernising country's infrastructure, which would entail large expenditures. The energy sector will support manufacturing growth and emergence of retail as a new consumer class will also boost the activity, market experts say.
"Though it is very difficult to forecast the mood of stock market, going public activity is unlikely to slow in coming months here as India is one of the best performing markets globally and is blessed with strong economic fundamentals," said Yogesh Kapoor, managing director for North India (investment banking) at Enam Securities Private Ltd. According to Prime Database, nearly Rs 60,876 crore of funds are proposed to be raised by a little over 100 companies in the coming period. The list includes companies that have already received approval from market regulator Securities and Exchange Board of India and also those entities that have filed draft papers with the watchdog. "Given the pipeline of capital raising from both public and private sectors, we expect capital rising next year too will not slow," said a primary market analyst at a Mumbai-based domestic brokerage house who did not want to be identified. After a very tough 2008 and lacklustre 2009, the passing year was a clear revival period in the Indian public issue market that was mainly backed by government's mega share sale progamme.
Year 2010 features 70 public issues, which includes 62 initial public offerings (IPOs) and eight follow-on public offerings (FPOs), according to data complied by brokerage firm SMC Global Securities.
The total fund-raising through these issues was to the tune of about Rs 71,114 crore. Of this, fund-raising through 62 IPOs was worth about Rs 39,710 crore and via FPOs, nearly Rs 31,403 crore.
Not only in India but globally also, IPO fund-raising activity will set record levels in 2010. According to an estimate by global consultancy firm Ernst & Young *E&Y), the total amount raised through the IPO route is expected to exceed $300 billion by the end of this year, which will exceed the previous record (the $295 billion raised in 2007).
"Despite the fragility of economic recovery in Western markets, Asia's economic growth story and record-breaking debuts have fuelled a strong worldwide IPO recovery," E&Y said in its year-end Global IPO Update, released a week ago. In the first 11 months of 2010, IPOs worldwide have already raised $255.3 billion in 1,199 deals.
In the domestic market, the public sector dominated primary market activity this year as they had a lion's share of 70.2 per cent (Rs 49,946 crore) of the total issue size. "Whichever way you look at it, the year 2010 was an action-packed year for the Indian primary market, the most happening place being the Department of Disinvestment," said Jagannadham Thunuguntla of SMC Global.
The Centre, which has a target to raise Rs 40,000 crore during the currency financial year -- the highest ever in a single fiscal -- has already garnered Rs 21,000 crore till the end of 2010 by cutting its stake in companies like Engineers India Ltd, Coal India Ltd (CIL) and MOIL Ltd.
CIL's issue, through which the government mopped up Rs 15,200 crore in October, was the biggest IPO in the history of the Indian capital market. Another remarkable story of the year was the listing of Standard Chartered on the Mumbai market through the first ever issue of Indian depository receipts.
"With the strong and dynamic fundamentals of the Indian economy, such new kind of innovation cannot be denied in coming period also," said Kapoor of Enam Securities. In the September quarter of the current financial year, the Indian economy expanded by 8.9 per cent, giving the government enough reason to see a growth of 9 per cent during the full fiscal ending March. The Sensex, the country's most-tracked index, too reached a high of 21,108 points in November, and analysts believe foreign institutional investors' support to this growth will keep investor sentiment buoyant.
Interestingly, the kind of companies that hit the markets this year was diversified and a number of public issues can be seen from the new-age modern industries such as microfinance (SKS), fitness (Talwalkars) and coaching institutes (Career Point).
"Compared to some of the other emerging markets, India is trading only at a slight premium, which we believe is justified considering the superior relative growth outlook," Angel Broking said in a note to investors.
India ranks fourth among the top six top six markets for fund-raising this year, according to E&Y. Greater China tops the list, while the US stands second, followed by Japan. South Korea and Malaysia stand at fifth and sixth place, respectively, according to the E&Y report.
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