Mumbai: Indian companies raised $7.23 billion (Rs33,258 crore then) through 78 initial public offerings in 2006, putting the country among the top 10 IPO markets in the world last year. Globally, money raised by firms through maiden listings hit a record high—$246 billion against $167 billion in 2005.
The number of listings was at 1,729, the highest in a calendar year since 2000. Reliance Petroleum Ltd’s $1.8 billion issue ranked 17th in the global top 20 list, according to the fourth annual global IPO report released by audit and consultancy firm Ernst & Young on Wednesday.
The global IPO market continues to be upbeat through the quarter of 2007, which saw $36 billion raised through 372 listings. Energy companies dominated more than 50% of the funds raised in India, though the real estate and energy sectors are expected to gain momentum this year, as seen from the DLF Ltd IPO, as well as a host of other realty firms that have lined up offerings in the coming months.
Funds have been raised primarily to grow operations, both organically as well as through acquisitions.
“The rapid growth in emerging market economies has resulted in migration of capital from the developed economies into the emerging markets. The corporate sector is on a growth trajectory, which has significantly increased their capital market needs,” said R. Balachander of E&Y India.
Chinese companies raised the highest quantum of capital—$56.6 billion in 175 IPOs.
The Hong Kong Stock Exchange hosted the world’s largest IPO ever when Industrial and Commercial Bank of China raised $21.9 billion. The second largest offering of 2006 was also from a Chinese company—Bank of China raised $11 billion.
Both IPOs did dual-listings on stock exchanges in Hong Kong and Shanghai.
US companies followed Chinese firms with total proceeds at $34.1 billion.
Brazil, Russia, India and China—the Bric countries— collectively raised $86 billion in 2006 against $29 billion in 2005 and the number of listings almost doubled to 279.
Private equity (PE) investors, pumped in an estimated $7 billion into India in 2006 and are expected to play a big role in 2007 as well.
According to Balachander, about 23-24% of all IPOs in India last year were by PE-backed companies.
Some of the PE-backed firms that went public include Sobha Developers Ltd and GMR Infrastructure Ltd.