With the equity markets continuing to see strong inflows from foreign investors, who have already bought stocks worth around $16 billion in the secondary market so far in 2009, merchant bankers are busy filing initial public offering (IPO) prospectuses with the market regulator. Going by mandates with investment bankers, the amount that companies are looking to raise over the next six to eight months is close to Rs 30,000 crore. Even small companies, they say, are hoping to pick up amounts of Rs 50 to Rs 60 crore each, while some are targeting Rs 100 crore.
So far in 2009, around 20 odd companies have raised close to Rs 19,000 crore through IPOs. Among the bigger issues have been those of power and realty firms. Companies are looking to pick up close to Rs 43,000 crore through Qualified Institutional Placements (QIPs), according to estimates put out by SMC Capitals. Investment bankers observe that foreign institutional investors (FII) continue to have an appetite for Indian equities. As Vinay Menon, head (equity capital markets) JP Morgan, points out, good companies should not have trouble raising money through IPOs since there is enough liquidity and markets like India and China are expected to continue to receive strong portfolio flows. However, merchant bankers remain cautious on the pricing of IPOs given the recent underperformance in the retail segment of issues such as JSW Energy and Godrej Properties which were priced at the lower end of the band. Nilesh Shah, deputy managing director, ICICI Prudential AMC has observed that the subdued retail interest could mean a more fair price for the forthcoming IPOs.
Among the bigger corporate, Reliance Infratel is reportedly looking to mop up somewhere around Rs 5,000 crore. There are several real estate firms including Emaar MGF Land that are in the queue. According to an estimate by SMC Capital, about 40 companies have filed prospectuses for IPOs and are awaiting Sebi approval. Among these are Sahara Prime, Sterlite Energy, Lodha Developers, Jaypee Infratech, DB Realty, Ambience, Prestige Estates, IL&FS Transportation Networks, Hathway Cable and Datacom, Glenmark Generics, Vascon Engineers, Nitesh Estates, Kumar Urban Development. Besides these IPOs, several follow on public offers (FPOs) are also expected to hit the market including several public sector undertakings (PSUs) with the central government having announced disinvestment plans
Among the 20 IPOs during 2009, power sector has emerged as the top sector with more than Rs 13,500 crore mopped up from the primary market by four companies. Among these four power companies, NHPC raised the highest amount of Rs 6,038 crore followed by Adani Power (Rs 3,016 crore) and JSW Energy (Rs 2700 crore).
IT is the next major sector after power which has raised funds through three public offers of Rs 117 crore. In this segment Excel Infoways Ltd has emerged as a big runner with other players like Thinksoft Globals Services and Edserve Softsystems.