Equity issuances highest in 10 years; India Inc raises Rs 1.8 trillion

Equity and equity-linked issuance (ECM) by Indian firms raised a total of $28.5 billion (Rs 1.8 trillion) in 2017, the highest amount in 10 years.
 
It was a 208 per cent increase over 2016, and the highest since 2007, when proceeds amounted to $31.2 billion (Rs 2,028 billion), a report by Thomson Reuters suggests. During the fourth quarter of 2017, total ECM proceeds reached $11.1 billion(Rs  722 billion), a 59.6 per cent increase from the third quarter, and the highest for such a period since the second quarter of 2007 Rs 852 billion.
 
The financials sector, driven by equity issuance from insurance companies and banks, accounted for the majority of ECM activity, with a mop-up of $15.4 billion (Rs 1,001 billion) or 54.1 per cent of the total. Telecommunications was next with 12.4 per cent, raising $3.5 billion (Rs 228 billion). Industrials, energy and power, and materials took 9.3 per cent, 7.8 per cent and 4.1 per cent market share, respectively. 
 
Kotak Mahindra Bank took the lead for Indian ECM underwriting with $3.6 billion (Rs 234 billion) in related proceeds, 12.6 per cent of India’s ECM activity, followed by Citi and Axis Bank with nine and 7.4 per cent, respectively.
 

Underwriting fees for equity and equity-linked deals issued by Indian companies totalled $259.6 million(Rs 16.9 billion), a 103 per cent increase from 2016, says Thomson Reuters. Kotak Mahindra led with $30.6 million (Rs 2 billion) or 11.8 per cent of wallet share. Citi was second with 8.3 per cent and $21.5 million (Rs 1.4 billion). At least 180 companies, including small and medium ones, tapped the market to raise $11.1 billion (Rs  722 billion) in 2017 by way of initial public offers (IPOs) of equity, surpassing the record of $8.6 billion (Rs 559 billion) in 2007. “A steady uptrend in India’s secondary markets and favourable regulatory and economic environment bolstered the IPO activity,” the Thomson note suggests.
 
The December quarter saw three IPOs mopping in excess of $1 billion (Rs  65 billion). General Insurance Corporation of India’s $1.7 billion (Rs 11.18 billion)one was the biggest in seven years, after Coal India’s $3.5 billion  (Rs 15 billion) in 2010. New India Assurance’s $1.5-billion (Rs 9.47 billion) IPO and HDFC Standard Life Insurance’s $1.3-billion (Rs 8.70 billion) IPO in November were the other big ones in the quarter. In September, SBI Life Insurance raised $1.3 billion (Rs 8.39 billion) in IPO proceeds.
 
The IPO pipeline is likely to remain robust in 2018, with big ones expected from Bandhan Bank, Reliance General Insurance, ACME Solar Holdings and ReNew Power Ventures, according to Thomson Reuters. State-owned companies that are preparing to list on the exchanges, as part of the government’s privatisation plan, include Hindustan Aeronautics, Indian Railway Finance Corporation and National Insurance.
 
Follow-on offerings reached a record high of $17.4 billion(Rs  1,131 billion) in proceeds, up 251.7 per cent from a year before and 61.1 per cent of India ECM activity. In June, State Bank of India priced its qualified institutional placement and raised $2.3 billion (Rs 150 billion), the largest India ECM issuance till date. Notably in 2017, the first infrastructure investment trust (InvIT) through IRB InvIT Fund raised $783.5 million(Rs 50 billion). India Grid Trust raised $348.8 million (Rs 22.5 billion).