New Delhi: The Indian primary market is back on track and Adani Power’s Rs3,000 crore IPO — the second biggest ever public offer — this week is likely to sizzle it further.
The IPO of Adani Power, promoted by the owners of Mundra Port & SEZ, opens on 28 June and plans to mop up to Rs3,016 crore from the primary market. This is the second biggest in country’s history after Reliance Power.
So far this year four companies have hit the primary market but the IPO of Mahindra Holidays & Resorts enthused the corporate world to raise funds from the capital market.
The issue of Mahindra Holidays was over subscribed nearly 10 times and the company mopped up Rs301 crore from the primary market.
“The Indian IPO market is mostly back on track after a hiatus of over a year. Foreign investors are showing confidence by subscribing to the securities and the fund raising by India Industry is gaining strength.
“Since the Adani Power IPO is being brought about by a big business house a lot of investors are keeping their money aside to invest in it after the pre-IPO placement garnered a good response. FIIs are also showing confidence and investing in big issues,” SMC Capitals Equity head Jagannadham Thunuguntla said.
Marketmen believe the response towards Mahindra Holidays IPO signals that the confidence of the investors are coming back and the green-shoot of revival is here.
Faced with uncertain financial conditions and economic sluggishness, firms have been holding back their IPO plans. But with signs of a revival and confidence of foreign investors, experts feel the segment would witness frenzied activity.
With about Rs4,000 crore expected to be mopped up by the government by divesting stake in two PSUs — NHPC and Oil India — analysts feel companies are waiting on the sidelines to tap the market after witnessing their response.
“Confidence in the ecosystem is back after projects took a back-seat due to lack of fund arrangement. Companies’ fascination for IPO is back of track,” Thunuguntla added.
In July this year two IPOs — Excel Infoways and Raj Oil Mills — got fully subscribed on the final day of offer, and raised a total of over Rs190 crore from the primary market. Earlier in February, Chennai-based EdServ Softsystems managed to raise over Rs20 crore.
At the beginning of 2009, there was a back log of about Rs75,000 crore worth of IPO plans, including Anil Ambani’s Reliance Infratel (Rs6,000 crore), Jaiprakash Power Ventures (Rs4,000 crore) and Future Ventures (Rs2,660 crore).
As many as 33 companies last year raised over Rs18,000 crore via the IPO route, of which the bulk of the volumes came from the biggest IPO so far, mainly from Reliance Power’s over Rs11,000 crore in January.