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Virendra Verma

Mumbai , Sept. 1

WITH the secondary market recording new highs every day, the primary market also seems to be attracting several companies looking to raise funds. A number of companies have approached SEBI over the last month and filed their offer documents to cash in on the positive sentiment prevailing in the stock market.

For the fortnight ended August 14, SEBI received five offer documents from companies operating in several sectors — the highest number in a fortnight in the last few years.

According to primary market experts and merchant bankers, the rise in the secondary market has boosted sentiment in the IPO market and it is possible for several more companies to raise funds from the public. The good response to several IPOs is also attracting more companies to the primary market.

Mr Prithvi Haldea, Managing Director, Prime Database (an independent primary market monitoring firm), said, "The primary market has to follow the uptrend in the secondary market. If the sentiment in the secondary market remains optimistic, several companies are expected to raise funds through IPOs."

According to Mr Haldea, some of the big IPOs that could be expected include that of Bharat Petroleum Corporation and Tata Consultancy Services. In addition, several private companies could also approach the market, he said.

Even by conservative estimates, the primary market could raise over Rs 1,000 crore in the next few months, felt market experts. Some of the issues that are lined up include Vijaya Bank (around Rs 200-240 crore), Indraprastha Gas (amount not known) and Ken Software Technologies (Rs 10.20 crore). In addition, the IPOs of two banks — UCO Bank (Rs 240 crore) and Indian Overseas Bank (Rs 240 crore) — are opening this week.

Some companies that have also planned rights issues (shares offer to existing shareholders only) include Hindustan Inks and Resins (Rs 200 crore) and Bajaj Electricals (Rs 11 crore).

Further, there are several small IPOs, ranging between Rs 2.5 and 3 crore, that are likely to hit the market soon.

Mr Haldea said the success of the Maruti IPO has enthused the sentiment of companies and small investors. Other IPOs have also provided good returns to the investors post-listing and this has also led to several companies to re-think their IPO plans, said a senior official of a leading merchant banking firm. Since the beginning of 2002, several companies approached the primary market and all of them provided good returns after listing. The list included Bharti Tele, i-Flex Solutions, Canara Bank, Union Bank and Divis' Laboratories.

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