The equity primary market in India witnessed a significant slowdown, while the activity in the debt market was robust.
Fund mobilisation in domestic markets through equity public issues was down by 22 per cent in the first half of 2011-12. Companies managed to raise a little over Rs 9,500 crore from April to September, said Prime Database, which maintains primary market records.
In number terms, companies launched 31 public issues between April and September, compared to 32 that hit the market during the corresponding period last year. This year, 30 initial public offers (IPOs) collectively raised Rs 5,004 crore, or 52 per cent of the total amount raised through equity issues in the domestic market in the past six months. Last year, 30 IPOs had managed to raise Rs 11,280 crore. The amount raised through follow-on public offers (FPOs) stood at Rs 4,578 crore this financial year, compared to Rs 1,000 crore in the first six months of the last financial year.
Seven companies raised Rs 4,589 crore through debentures from April to September, compared to two that raised Rs 971 crore during the corresponding months last year. Lack of PSU IPOs has been a big disappointment for markets.
The average deal size in the primary market fell to Rs 309 crore from Rs 353 crore last year. Only two companies came out with public issues of over Rs 1,000 crore. But there were 11 issues of less than Rs 50 crore that hit the market during the current year. The smallest IPO was that of Rs 23.25 crore. No surprise that anchor investors subscribed to only four IPOs out of the 31 that hit the market this year.
PRIME said: “Almost 88 per cent, or Rs 8,405 crore, was raised through fresh capital, which goes into creation of productive assets, while the remaining Rs 1,177 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.”
Banking and other financial sector companies were major fund raisers this year. Seven companies raised Rs 7,621 crore (79.6 per cent of the total amount), followed by electronics-consumer & media with two issues raising Rs 324 crore (3.4 per cent) and electric electronics equipment with two issues raising Rs 320 crore (3.3 per cent).
Over 100 companies have filed for IPOs and debt issues. They are either waiting or have already got approval from the Securities and Exchange Board of India.