Choices galore for IPO investors

Public equity markets witnessed an all-time high raising of ₹1,77,116 crore in FY 2017-18 , a growth of more than 100 per cent over the previous high of ₹86,710 crore in FY 2009-10. According to Pranav Haldea, Managing Director of PRIME Database (a database provider on the Indian primary capital market), the figure for FY 2017-18 was 3.46 times that raised in the previous year. In 2016-17 the amount raised was ₹51,120 crore.

According to Haldea, 45 mainboard IPOs came to the market collectively raising ₹82,109 crore, while 52 already listed companies used the QIP route to mobilise ₹62,358 crore in FY 2017-18. The amount raised through both IPOs and QIPs was an all-time high. The previous high for the IPO market was ₹41,323 crore in 2007-08, while the previous high for QIPs was ₹39,768 in FY 2009-10. (For number of IPOs raised since 2012 and QIPs since 2006, please refer to the tables.)

The largest IPO raised was from General Insurance Corp. for ₹11,257 crore, while the largest QIP raised was from SBI for ₹15,000 crore, accounting for 24 per cent of the total QIP amount. According to Haldea, QIPs were dominated by banks, with their contribution being 53 per cent (₹33,248 crore) of the overall amount.

Out of 45 IPOs that were raised in the market, 17 had a prior PE/VC investment. Offers for sale (OFS) by such PE/VC investors accounted for 13 per cent of the total IPO amount and stood at ₹10,831 crore, while offers for sale by promoters accounted for a further 64 per cent of the IPO amount at ₹52,340 crore.

According to Haldea, 17 out of 45 IPOs got a mega-response of more than ten times while eight IPOs were oversubscribed by more than three times. While 14 IPOs were oversubscribed between one and three times, data for six IPOs was not yet available.

Haldea also highlighted that FY 2017-18 witnessed an all-time high for SME IPOs and divestments as well. According to him, there were 155 SME IPOs with the highest ever amount collected (₹2247 crore), while the divestments target was overachieved as the Government raised ₹98,965 crore in FY 2017-18.

Apart from this, offers for sale through stock exchanges, which is for dilution of promoters’ holdings, saw an increase from ₹8,390 crore last year to ₹18,438 crore raised in this year.

Outlook for 2018-19

According to Haldea, 2018-19 is likely to see more volatility in the secondary market, and this is expected to have an impact on companies’ fundraising plans. While there are 12 companies holding SEBI approval and wanting to raise over ₹10,395 crore, another 18 await SEBI approval for raising around ₹29,282 crore.

Some companies that have received IPO approval for 2018-19:

· Reliance General Insurance Company Ltd: ₹1600 crore

· CMS Info Systems Ltd: ₹1300 crore

· ACME Solar Holdings Ltd: ₹2200 crore

· Barbeque Nation Hospitality Ltd: ₹700 crore

· Indian Renewable Energy Development Agency: ₹900 crore

· Prince Pipes and Fittings Ltd: ₹800 crore

Some companies awaiting IPO approval for 2018-19:

· National Stock Exchange of India Ltd: ₹10,000 crore

· SREI Equipments Finance Ltd: ₹2000 crore

· Flemingo Travel Retail Ltd: ₹2423 crore

· Sembcorp Energy India Ltd: ₹4095 crore

· HDFC Asset Management Company Ltd: ₹4000 crore

· Atria Convergence Technologies Private Ltd: ₹1500 crore