New Delhi: When it comes to raising funds, both the government as well as the private sector appear to be flocking to the share sale route with plans to sell shares worth a whopping Rs1,20,000 crore this year.
Besides the government’s disinvestment target of Rs40,000 crore through initial and follow-on public offers of state-run firms this fiscal, the promoters of private sector companies could also raise a similar amount through public offers, the country’s top investment banking and brokerage firm ICICI Securities (I-Sec) has said.
Companies are looking to raise another Rs40,000 crore through QIPs (qualified institutional placements) or sale of shares to institutional investors, taking the total amount to be raised through share sales this year to Rs1,20,000 crore, I-Sec managing director and chief executive Madhabi Puri Buch told PTI.
Last year, the government and the private industry together mopped up about Rs1,00,000 crore through IPOs, FPOs and QIPs. That included about Rs50,000 crore raised in the primary market through public offers of both private and public sector companies and the remaining through QIPs.
Asserting that there is enough appetite in the market for such a strong pipeline of IPOs, FPOs and QIPs, Buch said the market has the potential for a much bigger primary market, when compared on a global perspective.
There have been voices in the market that a large number of big-size public offers tend to suck out liquidity from the markets which is still in a developing stage, and the recent ‘dismal’ performance of some high profile IPOs and FPOs could dampen sentiment for upcoming issues.
Buch, however, said none of the major IPOs in the recent past could be dubbed as disappointing as they managed to sail through and meet the targets for raising funds despite weak global cues. “I disagree that these were dismal performances. One criticism was that retail segments was under-subscribed, or retail investors not showing enough interest,” Buch said.
“However, this has more to do with the size of the offerings. When there is a large offer, the portion reserved for retail investors also become large and there occurs the chances of under-subscriptions. But, the regulations permit the unsubscribed shares of one segment to pass through to other segments like that of institutional investors, which are over-subscribed,” she argued.
Noting that there is enough appetite for more share sale offers expected in the market over the coming months, Buch said a strong pipeline is there and the response is also expected to be robust for them.