41 SME IPOs raised Rs 358 crore so far this fiscal

Out of 56 initial public offering (IPOs) in the first half of the current fiscal, 41 IPOs were by Small, Medium Enterprises raising a small amount of Rs 358 crore, a PRIME Database report said.

The amount mobilized through initial public offering in the first half of the current fiscal is highest in the last nine years with Rs 17,283 crore. The last highest was witnessed in 2007-08 at Rs 21,244 crore, the report said.

"Of the 56 IPOs, there were 15 main board IPOs mobilising Rs 16,924 crore (98% of the amount) with the balance 41 being SME IPOs mobilising a small Rs 358 crore", said the report.

This IPO mobilization represented an over 3-time increase from the corresponding period of the preceding year in which Rs 4,950 crore was raised.  

The largest main board IPO was of ICICI Prudential Life Insurance which was worth Rs6,057 crore while largest SME IPO was that of Radhika Jeweltech worth Rs 47 crore. The average deal size for the main board IPOs was a high Rs.1,128 crore, the report added.

Pranav Haldea, Managing Director of PRIME, in a report titled 'IPO mobilization at 9-year high of 2016-17, strong pipeline ahead', said that in terms of the method of offering, all 15 companies of the main board IPOs were via bookbuilding route. For the SME IPOs, out for 41, three SME IPOs were through bookbuilding route while the remaining 38 SME IPOs were through the fixed price method.

"All 15 main board IPOs had anchor investors, which collectively subscribed to 30% of the total public issue amount. The domestic institutional investors played a significant role as anchor investors, with their subscription amounting to 15% of the issue amount, which was incidentally the same as that of FIIs", Haldea said.

Out of the 15 main board IPOs, eight of the companies received mega response. Advanced Enzyme Technologies at 82 times, Quess Corp (81), Thyrocare Technologies (52), RBL Bank (49), Mahanagar Gas (45), Ujjivan Financial Services (29), Dilip Buildcon (15) and Equitas Holdings (12).

The period received good response from retail investors too. Larsen & Toubro Infotech received highest number of applications at 10.25 lakh, followed by RBL Bank (10.16 lakhs), Mahanagar Gas (9.36 lakhs), Advanced Enzyme Technologies (7.6 lakhs) and Thyrocare Technologies (7.01 lakhs).

Sector wise, due to the big issue of ICICI Prudential for Rs 6,057 crore, the banking sector had the dominant share with 49% of the total amount. This was followed by power sector with four issues raising Rs 3,072 crore, with 14% and Information Technology with four issues raising Rs 1,678 crore with 8% of the total amount. 

As per Haldea, "we are now starting to see even larger size IPOs hitting the market. On an overall basis too, the pipeline looks promising. At present, 16 companies planning to raise Rs 5,745 crore are holding Sebi approval and another five companies intending to raise Rs 6,810 crore have filed with Sebi and are awaiting approval."

Till now, Rs 4,034 crore was raised through offer for sale. Almost the entire OFS amount was on the back of Government disinvestment programme with Rs 3,765 crore, 93% of the total OFS amount. The amount was raised in the OFS of NHPC (Rs 2,735 crore), Hindustan Copper (Rs 402 crore), IOC-offer to employees (Rs 262 crore), NTPC-offer to employees (Rs 204 crore), EIL-offer to employees (Rs 32 crore) and NHPC-offer to employees (Rs 130 crore), the report said.

With this, the total amount raised through equity offerings in the first half of the year was Rs 21,316 crore (17,283 crore via IPO plus 4,034 crore via OFS).

Source: PRIME Database

According to Haldea, the disinvestment by the government not as per the expectation. While the government had made several announcements, very few transactions have been materialised till now.

Further, as per the report, only 19% of the total amount raised in the first half was raised via fresh capital (nearly Rs 4019 crore), which goes into creation of productive assets, while the remaining Rs 17,298 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.