The first quarter of 2020 is expected to see major action in equity capital markets, with several large deals in the pipeline collectively expected to raise around $5 billion (about ₹35,000 crore).
On Wednesday, telecom operator Bharti Airtel Ltd launched its $2-billion qualified institutional placement (QIP). The Airtel QIP is the largest such share sale by a private sector company, beating the previous record of ₹12,500 crore (approximately $1.74 billion) by private lender Axis Bank in September 2019.
QIP is a capital-raising tool through which listed companies can sell shares, fully and partly convertible debentures, or any security, other than warrants that are convertible into equity shares, to qualified institutional buyers.
But Airtel’s is just one of the bunch of major equity share sales lined up for the quarter. Market participants see at least another $3 billion worth of deals across QIPs and initial public offerings (IPO)during the quarter.
SBI Cards and Payment Technologies Ltd, the credit card arm of India’s largest lender State Bank of India, which is also backed by global private equity major Carlyle Group, is expected to launch an over ₹9,000-crore IPO, sometime in January, or early February, depending on Sebi’s approval for the share sale, said one person aware of the company’s plans, requesting anonymity.
Avenue Supermarts Ltd, which runs the popular supermarket chain DMart, is expected to launch a ₹7,000-crore QIP in February, with the intention to bring down promoter stake to comply with Sebi’s norms of public shareholding in listed companies, said two people aware of the development, also requesting anonymity. As on 30 September, DMart promoters held a 80.21% stake in the company, which has to be brought down to 75% by March. Other major deals expected to hit the markets include UTI Asset Management Co Ltd’s ₹3,000-crore IPO, besides the ₹1,000-crore IPO of Mindspace Business Parks REIT, which is backed by developer K Raheja Corp. and private equity firm Blackstone.
According to Pranav Haldea, managing director, Prime Database group, a primary markets data tracker, large fundraises in the equity markets could attract strong investor interest, since in recent times, investors have displayed a preference for the large-cap space over mid- and small-caps.
“While the Sensex and Nifty are touching record peaks, the mid-cap and small-cap space have not performed as well. In fact, the gap between large-caps and mid-caps has been steadily widening. There is still a lot of risk aversion on the table, which is why smaller companies are not finding enough investor interest," said Haldea.
“IPOs saw record subscriptions and very high listing gains, especially in the second half of last year. Good companies with strong fundamentals, from attractive sectors and being offered at reasonable valuation, shall always find enough investors," he added.
SBI Cards, Avenue Supermarts, UTI AMC and Mindspace REIT did not respond to Mint’s queries on their launch timelines.