Fund-raising via equity market routes plunges 60% in 2018

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Mumbai | Published: December 28, 2018 1:45:23 AM

Fund-raising via initial public offerings (IPOs), offers for sale (OFSs) and qualified institutional placements (QIPs) dropped 53.89%, 40.98% and 72.72%, respectively, compared with CY17.

The average deal size in the calendar year was Rs 1,290 crore; the largest IPO came from Bandhan Bank, at Rs 4,473 crore.

Companies raised Rs 63,744 crore through various equity market routes in 2018, 60% lower than the all-time high of Rs 1,60,032 crore garnered in the preceding calendar year, data analytics major Prime Database said in a report.

Fund-raising via initial public offerings (IPOs), offers for sale (OFSs) and qualified institutional placements (QIPs) dropped 53.89%, 40.98% and 72.72%, respectively, compared with CY17. In contrast, fund-raising through rights issues, SME IPOs and public bonds gained by 183.5%, 36% and 359.8%, respectively.

The average deal size in the calendar year was Rs 1,290 crore; the largest IPO came from Bandhan Bank, at Rs 4,473 crore.

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According to Prime Database, 24 main-board IPOs in 2018 raised Rs 30,959 crore against Rs 67,147 crore raised through 36 IPOs last year.

Only six out of the 24 IPOs that hit the market had a prior PE/VC investment. OFS by PE/VC investors at Rs 3,242 crore accounted for 10% of the total IPO amount. OFS by promoters at Rs 17,697 crore accounted for a further 57% of the IPO amount. Pranav Haldea, managing director at Prime Database said, ”The domestic institutional investors played a significant role as anchor investors, with their subscription amounting to 16% of the amount, the same as for FPIs.” In contrast to mainboard IPOs, the SME (small and medium enterprises) segment has performed better as the amount of money raised has almost doubled this year compared with the previous year. “The year, again, witnessed significant activity in the SME platform; there were as many as 141 SME IPOs, the highest ever, which collected a total of Rs 2,285 crore against previous year with 133 IPOs raising Rs 1,679 crore,” added Haldea.

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OFS dropped to Rs 10,678 crore, compared to Rs 18,094 crore raised last year. OFS was majorly driven by government’s divestment, which enabled it to raise Rs 6,524 crore. The largest OFS was from Coal India in October (Rs 5,274 crore) followed by Larsen & Toubro Infotech (Rs 1,846 crore). While QIPs too disappointed in CY18, as 25 companies mobilised only Rs 16,677 crore against Rs 61,148 crore raised in the previous year. The largest QIP of 2018 was from Idea Cellular raising Rs 3,500 crore, accounting for 21% of the total QIP amount.

Mobilisation of resources through rights issues, according to PRIME, recorded an increase in 2018. By amount, the period saw Rs 18,827 crore being raised, which was higher by 184% than Rs 6,639 crore that was raised in the preceding year. In addition, Public bonds market saw a near five times increase with 20 issues raising Rs 29,944 crore in comparison to nine issues raising Rs 6,511 crore last year.

According to Haldea, not too much action is likely to be seen at least in the first half of 2019 till the conclusion of the national general elections, despite the fact that the pipeline on the IPO front is huge, with 59 companies holding Sebi approval wanting to raise nearly Rs 63,170 crore and another 19 companies wanting to raise nearly Rs 18,067 crore awaiting Sebi approval.

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