PremiumMumbai: Fund raising through equity markets increased 28% to Rs.81,174 crore in calendar 2019, according to market data service provider, Prime Database. Primary markets have given 15% returns in 2019, against 6% last year, as there has been decent demand for fund raising through equity markets.
The data includes funds raised through initial public offerings (IPO), offer for sale (OFS), qualified institutional placements (QIP), and Real Estate Investment Trusts (ReIT) and Infrastructure Investment Trusts (InvIT).
Sixteen initial public offerings (IPO) hit the market in 2019, collectively raising Rs.12,362 crore. Only three out of the 16 IPOs had a prior private equity/venture capital (PE/VC) investment, a notable change from previous years. Offer for sale by such PE/VC investors at Rs. 803 crore accounted for just 6% of the total IPO amount. Offer for sale by promoters at Rs.7,513 crore accounted for 61% of the IPO amount. This was a decline of 60% from the Rs.30,959 crore raised through 24 IPOs in 2018.
Overall response from the public for the IPOs was good, with 7 receiving mega response of more than 10 times -- IRCTC (109 times), Ujjivan Small Finance Bank (100 times), CSB Bank (48 times), Affle (48 times), Polycab (36 times), Neogen Chemicals (29 times) and Indiamart Intermesh (20 times).
"The mobilization, however, fell 49% short than the all-time high amount of Rs. 1,60,032 crore raised in 2017," said Pranav Haldea, managing director, Prime Database.
Offers for sale (OFS) through stock exchanges, which is also dilution of promoters’ holdings, saw a huge increase. In 2019, ₹25,811 crore was raised through OFS against ₹10,672 crore in 2018. Of this, the government’s divestment accounted for Rs. 5,871 crore or 23% of the overall amount. The largest OFS was that of Axis Bank’s Specified Undertaking of Unit Trust of India in February (Rs. 5,358 crore) followed by SBI Life Insurance (Rs.3,524 crore) and HDFC Life Insurance (Rs.3,366 crore). OFS accounted for 32% of the year’s equity market amount.
Through qualified institutional placements (QIP), 11 companies mobilised Rs. 35,238 crore, 112% higher than Rs. 16,587 crore raised in the previous year. The largest QIP of 2019 was from Axis Bank which raised Rs. 12,500 crore, accounting for 35% of the total QIP amount. QIPs were dominated by banks, NBFCs and real estate companies.
Though the government has set a target of ₹1,05,000 crore through divestment in 2019-20, only Rs. 17,744 crore or 17% has been achieved so far. Reduction in the government’s holding in 26 listed state-owned companies to 75%, which is also a mandatory requirement, can contribute to over Rs. 23,000 crore of this. The government has set a roadmap for several unlisted profit-making companies to get listed and also identified 44 firms for strategic sale.
Mobilisation of resources through rights issues recorded a whopping 176% increase in 2019 to Rs. 52,053 crore. Vodafone Idea raised Rs.25,000 crore and Bharti Airtel Rs.24,939 crore. Prime Database has not included this amount in ₹81,174 crore.
In 2019, Embassy Office Parks saw the first-ever ReIT listing, raising Rs. 3,874 crore. The amount raised through Real Estate Investment Trusts (ReIT) and Infrastructure Investment Trusts (InvIT) saw an increase of 127% from previous year.
"The recent buoyancy in secondary markets as also the listing performance of IPOs in the last few months has provided some impetus to the primary market. The IPO pipeline continues to remain strong with 21 companies holding SEBI approval wanting to raise nearly Rs. 18,700 crore and another 13 companies wanting to raise nearly Rs. 18,000 crore awaiting SEBI approval," according to Haldea.
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