Minus SMEs raising Rs 335 cr, IPO mkt even more weak last year

Written by PTI | Mumbai | Updated: Jan 6 2014, 18:03pm hrs
The IPO market, which hit 12-year low in 2013, could have been worse had it not been for the large number of SME issues raising Rs 335 crore or 21 per cent of total money raised through this route during the year.

Top bourses BSE and NSE promoted Small and Medium Enterprise platforms in 2013 and as a result 35 small units hit the market raising Rs 335 crore.

The entire primary market, on the other hand, stood at a paltry Rs 1,619 crore - 12-year low - according to the data collated by Prime Database.

Against this, in 2012, only 14 SME IPOs worth Rs 103 crore had hit the market.

The BSE SME Platform launched in March 2012 saw 31 small units getting listed in 2013, while the NSE platform - Emerge - launched in March 2013, saw 4 companies getting listed in the year, as against an expected 9-10 listing in the first three months of the launch.

According to analysts, the IPO market was dry due to regulatory issues and the overall dull economic conditions.

On the regulatory front, the Sebi demand for offering a safety net for retail investors in the IPO market acted as a big bump, said an exchange official who did not want to be named.

The official said, however, that the Sebi proposal for an IPO-less listing for SMEs will drive the market going forward.

The year closed with the Sensex gaining 9.1 per cent and the Nifty rallying 6.5 per cent.

Some of the SMEs that did well on the market included Looks Health Services, GCM Securities, SRG Housing, Max Alert Systems, Comfort Commotrade, RCL Retail, Eco Friendly Food Processing, HPC Biosciences, Samruddyhi Realty and Ashapura Intimates Fashion among others. On an average, these stocks have risen more than two times their issue price, according to exchange data.

"The mobilisation in 2013 was the lowest in the past 12 years, the previous low being in 2001 when only Rs 296 crore were raised through IPOs. The highest-ever mobilisation through IPOs was in 2010 at Rs 37,535 crore," Prime Database managing director Pranav Haldea said.

This is clear from the fact that there were just three main-board Initial Public Offers during the entire year. They were Just Dial's Rs 919 crore, Repco Home Finance's Rs 270 crore issue and V-Mart Retail's Rs 94 crore IPO.

Haldea said 2013 highlighted the continuing dismal state of the IPO market in the last three years with 2011 seeing Rs 5,966 crore being raised while that of the mop-up in 2012 stood at Rs 6,938 crore.

Last year saw just 38 companies hitting the market, while the previous year saw 25 companies collecting Rs 6,938 crore and 2011 had 37 companies going public and raising Rs 5,966 crore. The best year was 2010 when 64 companies went public raising a record Rs 37,535 crore.

Haldea said 2007 was the best year in terms of number of issues with 100 IPOs raising Rs 34,179 crore, followed by 2006 when 73 firms mopped up Rs 19,852 crore. Since 2002, 490 companies raised Rs 1,69,299 crore from the market.

Last month, Sebi chairman UK Sinha had said that as many as Rs 72,000 crore worth of IPOs cleared by the Sebi are yet to hit the market or called off the plan all together.

Haldea said over the past five years 107 IPOs, which had received Sebi approval since January 2009 to raise Rs 55,330 crore, lapsed. In addition, 54 planned issues filed since January 2009 to raise Rs 16,032 crore withdrew their offer documents.

If these 161 companies had hit the market, Rs 71,362 crore more, almost the same as the Rs 71,602 crore which was actually raised in the five-year period since 2009, could have been raised, he said. On the other end were 9 IPOs that failed to elicit any investor response.

These are Samvardhana Motherson's Rs 1,665 crore issue, Galaxy Surfactants' Rs 193 crore, Tara Health Foods' Rs 175 crore, Scotts Garments' Rs 136 crore, Sai Silks' Rs 89 crore, Plastene India's Rs 75 crore, Goodwill Hospital's Rs 62 crore issue, Fatpipe Networks' Rs 49 crore issue and Swajas Air Charters' Rs 36 crore issue did not do well.

In other words, these 170 planned IPOs worth Rs 73,842 crore had to either cancel/defer their plans, Haldea said.

According to him, with the lingering uncertainty on the economic front and volatile secondary market, an IPO revival is not likely in the near-term though 915 companies have made their IPO plans public.