Big­-ticket IPOs are back with a bang

MUMBAI: Indian companies have raised nearly ₹6,000 crore during the first three months of this fiscal through a string of new stock floats, signs that companies are beginning to add capacities amid budding revival signs in the broader economy.

Seven companies, ranging from healthcare to dairy product chains, raised ₹5,855 crore through initial public offerings (IPOs) during April to June — amount raised the first quarter through IPOs in nine years and more than what was raised in the entire fiscal 2013-14 and 2014-15.

With the regulator Sebi having cleared some 19 more IPOs that aim to raise a cumulative ₹7,705 crore , and another five companies waiting in the wings for permission to hit the markets to raise ₹3,230 crore, it would appear that the economy is well and truly in the green.

“A major revival is being seen in the IPO market after several dismal years,” said Pranav Haldea, MD of Prime Database, the premier database on the country’s primary capital market. Despite a volatile secondary market, six main-board IPOs collectively raised ₹5,728 crore (against ₹2,280 crore raised in 5 IPOs in the corresponding period last year). The highest-ever mobilization through IPOs (April-June) was in 2007-08 at ₹13,083 crore.”

Most companies had postponed IPO plans as adverse market conditions stemming from an ongoing global slow down indicated a lack of appetite from investors. Now with the government close to implementing key legislations, including the GST, and a good monsoon likely to boost rural consumption, companies have again revived plans for public floats.

The April-June period also witnessed activity on the SME platforms, with as many as 13 SME IPOs, collecting about ₹127 crore. In the corresponding period last year, there were nine IPOs that raised ₹42 crore.

The largest IPO was from financial services company Equitas Holdings that raised ₹2,177 crore. The average deal size was a high ₹955 crore.

“A notable feature of the period was that several companies that hit the market had a prior private equity or venture capital investment,” said Haldea. At least three out of six IPOs had prior PE investments, indicating that such investors were able to exit their holdings, which inturn can boost the PE investment sentiment in the country.

All six companies had anchor investors, which collectively subscribed to 33% of the total issue amount. Domestic institutional investors’ subscription amounted to 21%, compared to 12% from FIIs. Offers for sale by PE/VC investors at ₹2,292 crore accounted for 40% of the total IPO amount.

The period was good for retail investors also. The highest number of applications was received by Mahanagar Gas at 958,000 followed by Thyrocare Technologies (701,000 ), Ujjivan Financial Services (636,000), Equitas Holdings (560,000) and Parag Milk Foods (81,000).

Offers for sale through stock exchanges, another route for raising public equity money through dilution of promoters’ holdings, saw an increase from ₹1,610 crore during the corresponding period of the preceding year to ₹3,033 crore. This was mostly accounted for by government divestment ₹2,998 crore.

The largest offer for sale (OFS) was that of NHPC in April (₹2,735 crore) followed by IOC in May(₹262 crore). OFS accounted for 33% of the total year’s public equity markets amount. This is likely to go up soon, Already L&T Infotech is scheduled to raise about ₹1,233 crore through an OFS on July 11.