IPO market in fast lane, companies mop up Rs 7,775 cr in Jan-Jun

The period has seen more than half of the 11 newly-listed stocks trading at a higher premium over the issue price

A total of 11 companies entered the capital markets in the first six months of 2016 with initial public offerings to raise a staggering Rs 7,775 crore, the highest in six years.

Further, several firms, including L&T Infotech, Hinduja Leyland Finance, CL Educate and Varun Beverages, have lined up plans to raise funds through IPO in coming months.

Moreover, companies from diverse sectors like energy, healthcare, financial services, staffing and milk and dairy products forayed into the IPO space during the period under review.

Experts attributed the impressive fund-raising through the IPO route to a rising stock market, which makes it attractive for companies to mobilise capital, and several private equity firms which want to exit from their investments.

The total proceeds from 11 IPOs in January-June are the highest since 2010, when 29 firms garnered Rs 9,693 crore in the first six months, according to the data.

In comparison, eight firms had collectively raked in around Rs 3,850 crore through initial share sale in January-June of 2015.

The period has seen more than half of the newly-listed stocks trading at a higher premium over the issue price.

"Quality companies which have been reasonably priced have been lapped up by retail investors. Expensively priced issues have seen lower participation," Quantum AMC Associate Fund Manager-Equity Nilesh Shetty said.

These firms raised funds for business expansion plans, working capital requirements, loan repayment and other general corporate purposes.

"Rising equity markets make it attractive for issuers of equity to raise capital at the moment. Plus, the government trying to meet its divestment target as well as a lot of private equities keen to exit their investments are leading to increased activity in the primary market," he added.

Equitas Holding's Rs 2,177-crore IPO is the biggest public issue in the first six months of 2016. Mahanagar Gas is ranked second (Rs 1,040 crore). Ujjivan Financial Services (Rs 882 crore), Parag Milk Foods (Rs 742 crore) and HealthCare Global Enterprises (Rs 650 crore) are all in top five.

Other IPOs that hit the Dalal Street in the first six months are Thyrocare Technologies, Infibeam Incorporation, Quick Heal Technologies, TeamLease Services, Precision Camshafts and Bharat Wire Ropes.

Further, L&T Infotech is scheduled to announce its Rs 1,243-crore IPO next month.

Besides, Hinduja Leyland Finance, an arm of Ashok Leyland, and test-preparation player CL Educate got market regulator Sebi's approval last month to float their respective IPOs.

Varun Beverages, franchisee for soft drinks maker PepsiCo, filed preliminary papers with Sebi last month for an IPO to raise over Rs 1,000 crore.