Even as the stock market saw strong bull rally, mobilisation through initial public offer has been just little over Rs 1,000 crore during first six months (April-September) of the current fiscal.

IPO is a mechanism through which a corporate entity sells its shares to public for the first time.

Silver lining

However, the silver lining is that 21 small and medium enterprises (SMEs) entered the stock market during the period under consideration. There were four non-SMEs' offering, too. However, amount-wise, four non-SMEs IPO collected Rs 851 crore, which is 84 per cent of total mobilisation. It may be noted that during April-September period of previous fiscal, 16 IPOs had collected 1,050 crore.

According to data collected by PRIME Database, the agency which tracks the primary market, the first six months of the current fiscal also saw another Rs 2,593 crore raised through the Offer-for-Sale through stock exchange mechanism.

“The funds raised through the OFS route were only due to promoters of listed companies having to dilute their stakes to meet SEBI’s requirement of minimum public shareholding (except in the case of NTPC and Nalco wherein shares were sold to employees),” Pranav Haldea, Managing Director of PRIME, said.

He also said that only 18 per cent of the total amount raised (Rs 661 crore) in the first half was raised through fresh capital, which typically goes into creation of productive assets, while the remaining Rs 2,951 crore was raised through offers for sale where the proceeds go to the sellers-government, promoters, venture funds and other investors and not to the company.

Time consuming process

Haldea feels that IPO process is time consuming, which is why there will be a lag of a few months before large-ticket IPOs hit the market. At present, five companies planning to raise Rs 1,240 crore are holding SEBI approval and another 11 companies intending to raise Rs 4,707 crore have filed with SEBI and are awaiting approval. Many more filings are likely to be seen and flurry of IPOs are expected in the balance part of this fiscal, especially during last 3 months (January-March. 2015) of the fiscal.

However, the disappointment is on the disinvestment front. Though, the Modi Government approved sell-off in Coal India, ONGC and NHPC besides previous Government’s nod for SAIL, Balco, Hindustan Zinc, RINL and Hindustan Aeronautic Limited, not a single offering has been made.

Still, Haldea hopes that disinvestment will gather pace up in the second half and Government will be able to meet the target of Rs 58,425 crore for FY 2014-15 (Rs 43,425 crore from government-owned companies and Rs 15,000 crore from sale of residual stake in non-government companies).

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