Encouraged by the positive sentiments prevailing in the secondary market, Indian corporates have raised R97,733.07 crore so far this calendar year, reports Ankit Doshi in Mumbai. This is the third best yearly performance after 2007 and 2010, when Indian corporates raised over R1.35 lakh crore each year.
According to data from Prime Database, secondary market offerings dominated the equity mobilisation with offers for sale (OFS) and qualified institutional placements accounting for roughly half of the money raised this year.
Sumit Jalan, ECM head and director, global market solutions, at Credit Suisse (India), highlighted the difference between primary and secondary market offerings, stating that a huge quantum of secondary market offerings does not indicate economic growth or business expansion. “As far as primary markets are concerned, investors remain selective and investors will only subscribe to quality names. In addition, primary markets also depend on robustness in the underlying equity markets and investors will be discerning given the recent developments in global markets,” said Jalan, whose firm helped Syngene International go public in July 2015.
The government sold 10% stake in Coal India (CIL) via OFS at the end of January 2015 and raised R22,557 crore – the biggest equity offering in India’s capital markets. Earlier this week, the government sold 10% stake in Indian Oil Corp that helped mobilised R9,300 crore.
In 2007, India Inc witnessed record equity issuances. Corporates raised Rs 1.37 lakh crore during the peak of the previous bull run followed by Rs 1.36 lakh crore in full-year 2010.
A senior official of a top domestic investment bank described the activity in India’s equity capital markets as “spectacular”. There is enough appetite among investors, and with plans of privatizing PSU banks, the equity pipeline is expected to be much longer, he said on the condition of anonymity due to the firm’s compliance protocols.
“We are positive and there is a lot of appetite. However, we will have to assess the recent developments in China and other global markets. However, there is a strong pipeline building for the next two-three quarters, especially in the primary markets,” said the official.
India’s primary market activity has seen a marked improvement compared to the previous four-five years. Thirteen companies have successfully concluded their IPOs this year and have raised nearly Rs 6,000 crore – three-year high.
In addition three dozen companies are in queue with a potential to raise more than Rs 21,000 crore.