With primary markets buoyant this year and initial public offers (IPOs) worth more than R20,000 crore hitting the market, existing shareholders and promoters have found good exits. Of the R20,540 crore raised in 2016 so far via initial share sales around R15,330 crore, or 75 %, went to promoters or private equity (PE) players who offloaded their stakes, data from Primedatabase shows. This share is the highest in ten years.
The remaining R5,209 crore will be used by companies either to repay debt or for working capital requirements. In CY15, around R7,074 crore or 52% of the R13,614 crore raised through IPOs was via offer for sale (OFS).
The PE players who diluted their holdings through IPOs during 2016 include marquee names Sequoia Capital, Helion Venture Partners, and Sarva Capital.
No. of Offers for Issue amount OFS as % of
Year* issues sale (R cr) (R cr) total issue
2006 73 942 19,852 4.74
2007 100 2,077 34,179 6.08
2008 37 986 16,904 5.83
2009 20 2,358 19,544 12.07
2010 64 20,534 37,535 54.71
2011 37 116 5,966 1.94
2012 11 2,405 6,835 35.18
2013 3 956 1,284 74.43
2014 5 702 1,201 58.48
2015 21 7,074 13,614 51.96
2016 22 15,330 20,540 74.63
Source: Primedatabase and stock exchanges
The initial share sale of both the Larsen & Toubro group companies — L & T Infotech and L &T Technology Services—were entirely offer for sales.
While L & T Infotech raised R1,260 crore, L& T Technology Sevices garnered R894 crore. Similalrly ICICI Prudential Life Insurance, the biggest IPO during 2016 so far, was entirely an offer for sale by ICICI Bank, which mopped up R6,057 crore.
Varun Beverages whose last date of issue was Friday also had a significant OFS portion. Out of the R1,113 crore the company raised, R446 crore is on account of 50 lakh shares each by promoters Ravikant Jaipuria and Varun Jaipuria.
In 2014, Securities and Exchange Board of India (Sebi) had tweaked IPO regulations , whereby companies with an after IPO market capitalisation of less than R4,000 crore are required to either dilute 25% or R400 crore of the issue, whichever is lower.
Companies with a post-IPO market capitalisation of more than R4,000 crore are required to dilute only 10% and would have an additional time frame of three years to achieve minimum public shareholding of 25%.