Govt makes 2010 record year for public floats

59 firms launch IPOs in 2010 to raise a total of Rs 36,017 crore

With the government tapping the capital market at regular intervals, 2010 proved to be a record year in terms of money mobilised through initial public offers (IPOs) and follow-on offers (FPOs).

The year saw Rs 67,595 crore being raised from the primary market, the highest ever in a calendar year.

According to PRIME Database, 59 companies launched IPOs in 2010 to raise a total of Rs 36,017.4 crore, more than the earlier record of Rs 34,179.1 crore in 2007. The year saw 100 unlisted companies entering the capital market.

Investment bankers said the mood was buoyant as a number of fundamentally good companies entered the market and there was enough demand from investors.

“Investors are always ready to back good quality companies that are appropriately priced,” says A Murugappan, executive director, ICICI Securities. “If an issue is fundamentally driven and backed by a good story, there are enough takers. One needs to remember that investors are sensitive to valuations. I also expect India allocations (of foreign institutional investors) to go up in the coming year.”

The year also saw India’s largest-ever IPO hit the market. Public sector heavyweight Coal India raised Rs 15,199.44 crore through a primary offering in October. In all, there were 14 issues (IPOs and FPOs) with a size of more than Rs 1,000 crore each. The year was also witness to the country’s first issue of Indian Depository Receipts, when Standard Chartered Plc entered the market with an issue of nearly Rs 2,500 crore.

Between all the mega issues, there were 19 offerings with an issue size of less than Rs 100 crore. Gravita India, Sea TV Networks, Talwalkar Fitness, Technofab Engineering, Bedmutha Industries and Thangamayil Jewellery were among the smaller companies that listed on the bourses.

FPO high
While IPOs touched a new high, FPOs created a record too. The year saw eight FPOs collectively mopping up a record Rs 31,577.25 crore, nearly twice the earlier record. It is also more than the cumulative amount raised through FPOs in the previous five years. The earlier record was Rs 17,389.4 crore raised in 2004. Six government-owned companies and a couple of private entities launched their FPOs this year.

The two largest FPOs during the year, of NTPC and REC, were also those that experimented with the auction mechanism approved by the market regulator early this year. In this system, an issuer has to announce only a floor price (instead of a price band) and institutional investors can bid at any price above this. Retail investors can bid at the floor price.