IPOs at 9-year high; raises Rs. 5,855 crore in Q1FY17

India Inc has once again turned to primary markets to raise money. 

During the first quarter of current financial year (Q1FY17), Indian markets witnessed a raising of Rs 5,855 crore through IPOs, highest in 9 years, according to Pranav Haldea, Managing Director, PRIME Database. Last year, five companies raised Rs 2,280 crore. 

The largest IPO, this year, was from Equitas Holdings, at Rs 2,177 crore. 

There was a time where privately owned companies would just find it difficult to raise capital via IPO path. In 2011-2012, around 13 countries went public raising around Rs. 2,365 crore – which is not even half of the current year's performance. 

During the period of 2012-15, a total of 5 companies entered the markets and raised around Rs 1,530 crore.

The highest amount raised was in 2007-2008, at nearly Rs 13,000 crore. 

A interesting fact of the period was that several companies that hit the market had a prior PE/VC investment. This was true for 3 out of the 6 IPOs. Offers for sale by such PE/VC investors at Rs.2,292 crore accounted for 40 per cent of the total IPO amount, said Haldea.

All 6 companies had anchor investors, which collectively subscribed to 33% of the total public issue amount. The domestic institutional investors played a significant role as anchor investors, with their subscription amounting to 21% of the amount, compared to 12% from FIIs, added Haldea.

Where IPOs were touching 9-year high benchmark, the qualified institutional placement (QIP) stood at 4-year low in the current quarter.

In FY17, fund raising from already listed companies from institutional investors declined by 94% with just 3 companies mobilising Rs 473 crore compared to Rs 7,460 crore raised in the corresponding quarter of the preceding year.

Haldea said that this is a worrying sign as despite largely bullish secondary markets (and QIP being a bull market product), not too many companies have shown an interest in raising fresh capital for growth/expansion.

The year is not over yet. 

As of today, there are 19 companies holding SEBI approval wanting to raise over Rs 7,705 crore and another 5 companies wanting to raise about Rs 3,230 crore are awaiting SEBI approval. Many more filings are expected in the near future, said Haldea.

For now, L&T infotech prepares to enter the IPO on July 11, 2016. Companies such as Vodafone and HDFC Life also plans to enter into IPO.