Offer for sale (OFS) issuances formed the bulk of the capital raised through public equity offerings in the first quarter of the current fiscal year even as initial public offerings (IPOs) remained conspicuous by their absence.
The total amount raised through OFS in the first quarter of FY14 totalled R4,507 crore, according to a report by Prime Database. In contrast, IPOs managed to mobilise just R942 crore during this period.
The quarter saw four IPOs and 51 OFS hitting the market compared with five IPOs and three OFS floated in the year-ago period. The rise in the number of OFS could be attributed to the mad dash to meet market regulator Sebi?s minimum public shareholding norms that required private firms to raise their public shareholding to at least 25% by June 3.
The Oracle Financial Services OFS that raised R1,008 crore was the largest for the three months ended June. The Just Dial IPO, which raised R919 crore, was the largest IPO during the period. The other three IPOs were from the SME sector. However, out of the total money raised, only R22 crore, or 0.4%, was raised through fresh capital, which typically goes into creation of productive assets, said the Prime Database report. Just one company used anchor investors to raise funds.
From a sectoral perspective , information technology dominated the overall fund raising scene, including OFS and IPOs, with three companies raising R1, 927 crore or 35% of the total amount raised.
The lone government divestment issue in the first quarter of the current fiscal was that of MMTC (R572 crore). ?The biggest disappointment for the primary market has been the lack of divestments by the government. Like in the previous years, the bulk of the disinvestment target may be met only in the last quarter,? said the report.
The report pointed out that the IPO pipeline looked promising, with issuances from Ortel Communications (R1,000 crore), IFCI Factors (R750 crore), Bharat Business Channel (R700 crore ) and Inox Wind (R700 crore) on the horizon.