IPOs, FPOs dip 92% in H1 current fiscal

Written by Agencies | New Delhi | Updated: Oct 9 2012, 22:11pm hrs
Companies sharesIndian companies raised Rs 772 crore through sale of shares to public investors (Reuters)
Indian companies raised Rs 772 crore through sale of shares to public investors in the first six months of current financial year -- marking a sharp plunge of 92 per cent from the amount garnered in the corresponding period of previous fiscal.

According to a report by Prime Database, corporate houses have mobilised Rs 772 crore through public equity issues during April-September quarter of current fiscal (2012-13), as against Rs 9,553 crore raked in the same period of the preceding year.

These included funds raised through initial public offerings(IPOs), follow-on public offer (FPOs) and Offer for Sale (OFS) routes.

There were 19 public issues comprises of 13 IPOs and six OFS, whereby shares are offered by promoters through stock exchanges in the April-September period of 2012.

In comparison, there were 30 issues in the year-ago period, including 29 IPOs and one FPO.

Prithvi Haldea Chairman and Managing Director of Prime Database said, "the biggest disappointment for the primary market has been the lack of divestments by the government.

Despite a target of Rs 30,000 crore and continuing announcements, no divestment took place in the first half of current fiscal."

He feels that this is as good a time as ever for the government to enlarge the investors base and the capital market, and to raise money that it so desperately needs.

Besides, other market analysts also believe that IPO market would revive in the coming months as an uptrend is being witnessed in the stock market on account of various reform measures being undertaken by the government and regulator Sebi (Securities and Exchange Board of India).

"On the immediate horizon is the Rs 5,000 crore Bharti Infratel IPO and the Rs 2,500 crore IPO from Rashtriya Ispat Nigam Ltd," the report noted.

As per the Prime report, the market could see offerings from some of the 35 companies already holding Sebi approval.

Besides, another 24 companies who have filed their initial papers with the Sebi are awaiting the regulator's nod.

A revival in the secondary market trends would also help the firms shift their focus to IPOs for their fund-raising plans.

In the last three months, broader market Sensex gained over 1,300 points or more than 7 per cent as Foreign Institutional Investors (FIIs) invested a hefty sum of a little over Rs 40,000 crore on the back of a slew of reforms initiated by the government.

The first six months of current fiscal (April-September 2012) was dominated by small IPOs with an average deal size being a meager Rs 37 crore.

Of the 13 IPOs, as many as 10 have been launched on the Small and Medium Enterprises platforms of the bourses BSE and NSE.

Nine of them were of less than Rs 10 crore and the largest issue in the period was of Rs 200 crore.

The report said that Rs 492 crore were raised through fresh capital, which typically goes to the company, while the remaining Rs 280 crore mopped-up through offers for sale where the proceeds go to the selling shareholders, which includes promoters, venture funds and other investors.

In terms of sector, jewellery space dominated the share sale process accounting 26 per cent of the total amount mopped-up followed by hotel and resorts (23 per cent).