Prime Database: Primary market activity to heat up even more in 2016

While 2015 was a record year for new companies getting listed, Prime Database, India’s premier database on the primary capital market, expects 2016 to be even more promising.

“Already at the beginning of the year, there are 20 companies holding SEBI approval wanting to raise Rs 7,315 crore  and another 11 companies wanting to raise Rs 5,445 crore awaiting SEBI approval. Many more filings are expected in the near future,” it said in a press release.

2015 saw a 76 per cent jump in capital raising of Rs 68,608 crore compared to 2014 and the amount raised was at a five-year high. 2010 saw the highest capital raising at Rs 97,746 crore.

The growth rate of 76 per cent could have been much higher if the government’s divestments were in line with targets set at the beginning of the year. The government scaled down its divestment target by 43 per cent to Rs 39,500 crore compared to Rs 69,500 crore in the Budget.

“While a good start was made with over Rs 35,000 crore being raised in the first eight months, the balance four months of the year did not see a single divestment hitting the market,” Prime Database said.

Of the total amount of Rs 68,608 crore, Rs 13,862 crore was done through initial public offers, which was again at a five-year high. The rest was through offer-for-sale and qualified institutional placement.

A total of 21 mainboard IPOs collectively raised Rs 13,602 crore, with the largest IPO by Interglobe Aviation. Of the 21 IPOs, 11 were backed by private equity or venture capital investment.

IPOs by small and medium enterprises continued to remain robust though the amount raised was almost the same as in 2015. “There were as many as 43 SME IPOs that collected Rs 260 crore compared to the previous year’s 40 IPOs worth Rs 267 crore.

While fund raising activity in mainboard IPOs was robust, not all issues shared the euphoria or huge investor interest.  While the seven IPOs of VRL Logistics,  Alkem Laboratories, Power Mech Projects, Dr.Lal Pathlabs, Syngene International, S.H.Kelkar and Inox Wind received a mega response with oversubscritption in the range of 14-53 times, two IPOs were oversubscribed by more than 3 times. The balance 12 IPOs were oversubscribed between one and three times.

Of the total amount of Rs 68,608 crore, the amount raised through fresh capital was only Rs 25,964 crore; the remaining Rs 42,644 crore being through offers for sale.

Like IPOs, OFS also saw a seven-fold increase at Rs 35,564 crore and formed 52 per cent of total amount raised in 2016, largely led by the government’s disinvestments in Coal India and Indian Oil Corporation. But QIPs, which are done by listed companies, saw a dip of 39 per cent.