A flood of public issues is expected to hit the markets as soon as stability returns to the Indian equity market. According to available data, as many as 125 companies have filed their draft offer documents (including rights and follow-on issues) with market regulator Securities and Exchange Board of India (SEBI), while still waiting for clear skies over the domestic markets. These issues may together raise around Rs 22,000 crore, say experts.
“There is a mix of small, medium and large companies in the list and they are together expected to raise around Rs 22,000 crore,” said Nimish C Shah, managing director of Fortune Financial Services, a Mumbai-based investment banking and brokerage house.
With the equity markets witnessing severe bouts of volatility since January this year, these companies are waiting for better market conditions to find enough buyers for their shares.
“Primary market issues depend on secondary market sentiment,” said Prithvi Haldea, founder and managing director of Delhi-based data provider Prime Database. “These companies are waiting for some stability in the market rather than for higher levels on key indices like the Nifty and the Sensex.”
The line-up of 125 companies that have filed their draft offer documents with SEBI includes big-ticket issues among a number of small-medium issues. A majority of the companies that are raising big funds are doing so to finance ambitious power projects.
Some of the names that are expected to mop up sizeable funds from the markets include JSW Energy, Jaiprakash Power Venture, Adani Power, Bharat Oman Refineries and Future Ventures India. When asked about pricing, Kishore Biyani, managing director, Future Group, said, “The Future Ventures issue is fairly priced. We are willing to go ahead as soon as we get the approval from SEBI.”
However, with equity markets undergoing a 5-month lull since January, the total amount of funds raised from the markets in calendar 2008 could be far lower than expected earlier.
Market experts had predicted that companies would raise up to Rs 60,000 crore from initial public offerings in calendar 2008. "The earlier estimate was that IPOs would garner Rs 60,000 crore in the current year,” said Haldea. “But almost five months into the year, under volatile market conditions, it is unlikely that companies would raise such a huge amount.”