June quarter mixed bag for fund-raising through equity

Capital raising through IPO surges, but via QIP dips

The recently-concluded June quarter has turned out to be a mixed bag for resource-raising through equities for India Inc. Initial public offerings (IPOs) saw a huge rise, while qualified institutional placements (QIPs) saw a sharp drop compared to last year. QIP is private placement of fresh equity shares to select investors.

According to Prime Database, the three months ended June saw Rs 5,855 crore mopped up via IPOs, most in nearly nine years. While, QIPs raised just Rs 473 crore, lowest in four years. During the same quarter of last year, Rs 2,322 crore was raised by IPOs and a whopping Rs 7,460 crore was raised through QIPs.

Pranav Haldea, managing director, Prime Database, said “a major revival is being witnessed in the IPO market after several dismal years.”

Haldea, however, said a sharp drop in QIPs despite buoyancy in the secondary market is a “worrying sign”.

The largest IPO during the June quarter was Equitas Holdings for Rs 2,177 crore. The average IPO size for a quarter was an encouraging Rs 955 crore.

The largest QIP during the June quarter was that by state-owned Indian Overseas Bank, which raised Rs 262 crore.

Interestingly, less than a fourth of money mobilised via equity during the June quarter was by issue of fresh shares. Over Rs 7,000 crore out of Rs 9,361 crore was offer for sale by existing shareholders or promoters.

Experts said low demand for fresh equity signals lack of growth and expansion plans by India Inc.