Key Highlights:

  • Companies raised Rs 1,61,116 cr via public equity market in 2017
  • Companies raised Rs 67,147 cr via IPOs, highest ever
  • There were 133 SME IPOs, highest ever, collected Rs 1,679 cr

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Companies raised highest ever funds through the public equity market in 2017, according to a report.
 
Through the public equity markets, companies raised Rs1,61,116 crore, 3.6 times the Rs44,819 crore that was raised in the preceding year, according to Pranav Haldea, managing director, PRIME Database, India’s premier database on primary capital market.
 
This is the highest amount ever raised in a calendar year, with the previous highest being Rs 97,746 crore in 2010.
 
According to Haldea, the year was also the best year ever for the initial public offering (IPO) market, raising Rs 67,147 crore. The previous high being in 2010 when Rs 37, 535 crore was raised. Last year, companies raised Rs 26,494 crore through 26 IPOs.
 
The largest IPO was from General Insurance Corp for Rs 11,257 crore. The average deal size was Rs 1,865 crore.
A notable feature of the year was that several companies that hit the market had a prior PE/VC investment. This was true for 17 out of the 36 IPOs. Offers for sale by such PE/VC investors at Rs 10,221 crore accounted for 15% of the total IPO amount. Offers for sale by the promoters at Rs 42,102 crore accounted for a further 63% of the IPO amount.
 
Out of the 36 IPOs, 29 companies had anchor investors, which collectively subscribed to 29% of the total public issue amount. The domestic institutional investors played a significant role as anchor investors, with their subscription amounting to 13% of the amount, compared to 16% from foreign institutional investors (FIIs).
 
The overall response from the public to the IPOs of the year, according to PRIME Database, was also very good. While 17 IPOs received a mega response of more than 10 times, 6 other issues were oversubscribed by more than 3 times and the balance 13 IPOs were oversubscribed between 1 to 3 times.
 
Salasar Techno Engineering (270 times), Astron Paper & Board Mill (241 times), Capacit'e Infraprojects (130 times), CDSL (119 times), MAS Financial Services (91 times), Dixon Technologies (83 times), HUDCO (79 times), Cochin Shipyard (76 times), D’Mart (73 times), Godrej Agrovet (68 times), Reliance Nippon Mutual Fund (57 times), S Chand (42 times), AU Small Finance Bank (38 times), BSE (36), Prataap Snacks (34 times), Shankara Building Products (29 times) and Music Broadcast (28 times), were the issues that received huge response from the investors.
 
As far as retail investors are concerned, the year witnessed a very good response from them. The highest number of applications was received by Cochin Shipyard at 19.42 lakhs followed by HUDCO (18.74 lakhs), DMart (17.40 lakhs), CDSL (17.29 lakhs) and Reliance Nippon Mutual Fund (15.60 lakhs).
 
According to Haldea, response to IPOs was further buoyed by strong listing performance of IPOs of the year.
 
Of the 36 IPOs which got listed, 18 gave a return of over 10% (based on closing price on listing date). Salasar Techno Engineering gave a stupendous return of 152% followed by Astron Paper & Board Mill (139%), DMart (114%), CDSL (76%), Dixon Technologies (64%) and AU Small Finance Bank (51%).
 
SME IPOs
 
The year, again, witnessed significant activity in the SME platform. There were as many as 133 SME IPOs, the highest ever, collected Rs 1,679 crore.
 
The largest SME IPO in the year, according to PRIME Database, was from Zota Health Care (Rs56 crore).
 
Offers for sale (OFS)
 
According to PRIME, offers for sale through stock exchanges, which is for dilution of promoters’ holdings, saw an increase from Rs 13,066 crore raised last year to Rs 19,208 crore in this calendar year. This was accounted for primarily by the government’s divestment at Rs 14,840 crore (77% of overall amount).
 
The largest OFS was that of NTPC in August (Rs 9,192 crore) followed by BEL in February (Rs 1,687 crore). OFS accounted for 12% of the amount raised this year.
 
Qualified Institutional Placement (QIPs)
 
Already-listed companies found the QIP route very attractive, with 44 companies mobilising Rs 61,118 crore, the highest ever. This was nearly 13 times of the Rs 4,712 crore raised in the previous year. The largest QIP of 2017 was from State Bank of India's 15,000 crore, accounting for 25% of the total QIP amount.
 
QIPs were dominated by banks with their contribution being 63% (Rs 38,282 crore) of the overall amount.
 
IPPs: Only 2 companies used the IPP route, mobilising Rs 4,668 crore.
 
Divestments
 
Government raised Rs 73,282 crore in 2017, the best year ever. Public offers (IPOs of HUDCO, Cochin Shipyard, GIC, New India Assurance and OFS of MOIL, BEL, NALCO, RCFL, NFL, HCL, NTPC, NLC) constituted a lion’s share of divestment proceeds at Rs 33,418 crore (46%) followed by exchange traded funds (ETFs) at Rs 23,000 crore (31%), Block Deals (SUUTI sales of L&T and ITC) at Rs 10,844 crore (15%), Buybacks (NHPC, NLC, OIL, EIL, Bharat Dynamics) at Rs5,627 crore (8%) and sale of shares to employees Rs394 crore (1%).
 
According to Haldea, the target for fiscal 2017-18 appears very much within reach. Reduction in the government’s holding in 18 listed CPSEs to 75% (which is also a mandatory SEBI requirement) alone can contribute to Rs 27,520 crore.
 
Further, the government has also placed a road map for several unlisted profit making CPSEs to get listed in the next two financial years, which includes several large companies from insurance and railways sector. The government has already identified 34 CPSEs for strategic sale.
 
Outlook for 2018
 
According to Haldea, 2018 looks even more promising. On the IPO front, already at the beginning of the year, there are 15 companies holding SEBI approval wanting to raise nearly Rs 12,000 crore and another 10 companies want to raise nearly Rs 19,000 crore awaiting SEBI approval. Many more filings are expected in the near future.
 
Public Bonds: In the public bonds market, 9 issues raised Rs 6,397 crore (lower than 19 issues raising Rs 41,827 crore last year).
 
Rights Issues
 
Mobilisation of resources through rights issues, according to PRIME Database, recorded an increase in 2017. About Rs 6,639 crore was raised, which was higher by 247% than Rs 1,914 crore raised in 2016. In 2017, 21 companies raised capital through rights route compared to 10 companies in the previous year. The largest rights issue in the year was from Indian Hotels (Rs 1,500 crore), followed by Canara Bank (Rs 1,124 crore), Karur Vysya Bank  (Rs 903 crore), Lakshmi Vilas Bank (Rs 787 crore) and South Indian Bank (Rs 631 crore), PRIME Database added.
 
Of the total amount of Rs 1,61,116 crore, the amount raised through fresh capital was Rs 86,176 crore (53%); remaining Rs 74,940 crore was offers for sale.