With the initial public offering(IPO) of GTPL getting fully subscribed, fundraising through the IPO route in the current year – 2017 – is nudging Rs 10,000 crore. Since the beginning of the year, a dozen firms have made their debuts on the bourses and have together mopped up Rs 9,840 crore. While 2016 was a good year for IPOs, a big chunk of the money was picked by debutants in the second half of the year. However, with the stock market hitting new highs, the IPO market in 2017 has got off to a good start. In CY 2008, 30 companies had raised Rs 16,441 crore in the first half of the year.
Listing gains and returns by newly-listed companies and the positive sentiment in the broader market are among the reasons attributed to the trend. Seven out of 10 companies who made their debut on the exchanges this year have listed at a premium. Avenue Supermarts, the owner of the D-Mart brand, listed a whopping 102% above its issue price. This is the biggest listing day opening in 12 years after Nandan Exim, whose stock opened at 140% premium to its issue price of Rs 20 in June 2005.
The newly-listed companies have given good returns to investors. The BSE IPO index, a gauge of newly-listed companies, rose 31.79 % year to date while the benchmark Sensex rose 16.27% during the same period. A third of the total money raised through IPOs was by financial services companies. BSE, HUDCO and CDSL are the companies who completed their IPOs in the last six months.
However, Rs 6,250 crore, or more than 64% of the Rs 9,840-crore raised through IPO, was via offer for sale (OFS). The initial share sale of Eris Lifesciences and BSE, two of the biggest issues this year, entirely offered for sales. While Eris Lifesciences raised Rs 1,732 crore, BSE garnered Rs 1,243.43 crore.
The offerings of CL Educate, Shankara Building Products and S Chand and Company had a significant OFS portion. Market participants said the buoyancy in the primary market is set to continue with at least a dozen more companies gearing up to hit the market. The government will launch the IPOs of Cochin Shipyard, New India Assurance, General Insurance and IRCTC. Among the private-sector companies, MAS Financials, Capacite Infra Projects, Bharat Road Network and NSE are expected to hit the markets this year.