India Inc has mobilised the highest ever Rs. 25,000 crore through equity offerings, including initial public offers and follow-on issues, in fiscal 2006-07, a latest study showed.
The total mobilisation during the fiscal is pegged at Rs. 24,993 crore, which is higher by five per cent than preceding year's Rs. 23,676 crore, according to Prime, a database in primary capital market.
"The mobilisation in the year could have been higher but for the two secondary market crashes during the year which forced temporary shelving of IPOs as also lack of divestments. Significantly, the year witnessed the largest equity IPO of Cairn India (Rs 5,789 crore)," said Prithvi Haldea Managing Director of PRIME.
As many as 76 IPOs collectively raised Rs. 23,706 crore or 95 per cent of the total amount in FY07 compared to same number of IPOs floated a year-ago mobilising just Rs. 10,808 crore.
The response from the public to the equity issues of the year was quite good, Haldea said adding, the main reason for the good performance of the primary market was the buoyant secondary market almost through out the year, the economic resurgence and the stable political climate helped the scenario.
However, due to the secondary market crashes as many as eight IPOs (all small) failed to evoke the requisite response and had to be refunded, he added.
The major IPOs during the year were from Cairn India (Rs 5,789 crore), Reliance Petroleum (Rs 2,700 crore) and Idea Cellular (Rs 2,444 crore).
However, follow-on public offerings (FPOs) by listed companies witnessed a huge decline during 2006-07 accounting for only five per cent of the total mobilisation.
The year saw only nine listed companies raising Rs. 1,287 crore as compared to 26 firms with total offer of Rs. 12,867 crore in the preceding year, the database showed.
The major FPOs during the year were from Patel Engineering (Rs 425 crore), Tanla Solutions (379) and DS Kulkarni (134).
The real estate or construction sector had the dominant share with 14 companies, followed by 13 in the textiles sector and eight in the media and entertainment sector, the database said.
On the other hand, offers for sale continued to fall, recording only Rs. 961 crore compared to Rs. 1,668 crore in the previous fiscal.
In 2003-04, offers for sale, substantially on account of PSU divestments, had accounted for a huge Rs. 15,128 crore, while in 2006-07 12 companies had an offer for sale, the total amount was very small as there was no divestment offer.
"The number of issues hitting the market recorded a 17 per cent decline in 2006-07 as the year witnessed 85 public issues compared to 102 in the previous fiscal," Haldea said.
However, the average deal size increased to Rs. 294 crore from Rs. 232 crore but the year did not have any small issues of below Rs. 10 crore.
Besides, the quality factor was evident through the total domination of existing companies, in most cases with well known promoters.
"Stringent entry norms and better vetting by stock exchanges, SEBI and QIBs have hugely improved the quality of issues," he added.