IPO arena hots up; cos plan to raise Rs 50K cr in 2010
New Delhi: Domestic companies are expected to
embark on a mega fund raising spree this year with plans to
raise over Rs 50,000 crore by way of public offers, driven by
the sharp recovery in the stock market.
The revival in the Initial Public Offer (IPO) market in
2009, is likely to get a boost this year as 50 companies have
already filed the draft prospectus with the market regulator
the Securities and Exchange Board of India (SEBI).
Indian companies had raised about Rs 20,000 crore through
IPOs in 2009.
Analysts believe with the government planning to sell
shares in a host of public sector companies by way of IPOs and
follow-on public offers (FPOs) fund raising can go up to Rs
50,000 crore this year.
"The IPO pipeline looks strong in 2010. Also the way the
government is pushing ahead with the disinvestment plan, fund
raising can go up to Rs 50,000 crore by the end of the year,"
SMC Capitals Equity Head Jagannadham Thunuguntla said.
As per the draft prospectus filed with the SEBI five
companies aiming to raise over Rs 307 crore have already
received the regulator's clearance for the IPO.
These companies have to hit the market within a year of
receipt of SEBI clearance. Further, 45 others are queuing up
to raise about Rs 35,000 crore and are awaiting SEBI approval.
The rest is expected to come from disinvestments the
government plans to undertake.
The IPO market is on fire post the decision of the UPA
government, which has come to power for the second term, to
dilute stake in PSUs as investors were waiting for these IPOs
to test the primary market.
As part of its disinvestment plans the government intends
to raise over Rs 20,00 crore by way of FPOs of NMDC, SAIL,
NTPC, and REC.
Besides these, some of the prominent private companies
which have their IPOs lined up include Jindal Power (Rs 7,200
crore), BPTP (Rs 1,500 crore), Reliance Infratel (5,000
crore), Emaar MGF (Rs 3,800 crore), Sahara Prime (Rs 3,450
Others which are waiting in the sidelines include
Sterlite Energy (Rs 3,000 crore), Lodha Developers (Rs 2,500
crore), Jaypee Infratech (Rs 1,650 crore) and DB Realty (Rs
"Of the total IPOs that are in the pipeline, as many as
16 are from real estate sector. However, their success is a
bit doubtful as the appetite for realty IPOs are currently
less," Thunuguntla added.
Primary market fund raising in 2008 saw 30 IPOs mopping
up Rs 17,000 crore, but shares of many these companies gave
the investors modest-to-good returns. The experience was even
better in 2007, when about 100 of them raised over Rs 32,000
crore and showered the investors with impressive returns.