Mumbai: The financial year 2018-19 witnessed fund raising of only Rs 56,440 crore through the public equity markets, 68 per cent lower than Rs 1,75,680 crore raised in the preceding year, according to Prime Database, a New Delhi-based research firm that tracks capital market data.
FY19 saw fundraising through IPOs drop by a steep 81 per cent from Rs 83,767 crore in the previous financial year to just Rs 16,294 in 2018-19. During FY19, just 14 main-board IPOs came to the market, collectively raising Rs 14,674 crore compared with 45 IPOs collecting Rs 81,553 crore in FY18.
The overall response from the public to the main-board IPOs was moderate. While two IPOs received a mega response of more than 10 times (RITES at 67 times subscription followed by HDFC Asset Management at 60 times), four other IPOs were oversubscribed by more than three times. The remaining seven IPOs were oversubscribed between 1 and 3 times.
The year also witnessed tepid response to issues from retail investors. The highest number of applications was received by HDFC Asset Management at 23.30 lakh, followed by Rites (12.96 lakh) and Ircon (8.62 lakh). The year saw significant activity on the SME platform; 106 SME IPOs collected a total of Rs 1,620 crore compared with 154 IPOs mopping up Rs 2,213 crore in FY18.
Pranav Haldea, Managing Director, Prime Database, said, “Fund raising in 2019-20 is going to be significantly impacted by the outcome of the general elections. While there are 64 companies holding Sebi approval wanting to raise over Rs 63,000 crore and another eight companies wanting to raise about Rs 7,600 crore awaiting Sebi approval, as we have seen in the past few months, this pipeline can vanish quickly in case markets are volatile and a bearish sentiment is prevailing.”
“Already in 2018-19, nine companies which were looking to collectively raise Rs 6,495 crore let their Sebi approval lapse, despite approvals being valid for a period of one year,” said Haldea in the report.
According to him, if the elections throw up a fractured mandate, many more companies are likely to allow their approvals to lapse. In contrast, if a stable government comes into power, a flurry of IPOs is likely to be launched.
Response to IPOs was affected by the poor listing performance of IPOs of the year. Of the 13 IPOs which got listed, only two gave a return of over 10 per cent on the listing date. Among the two, HDFC Asset Management gave a stupendous return of 65 per cent and Rites, 15 per cent.
Divestment of PSUs through multiple routes like exchange traded fund (ETF) , offer for sale (OFS), buyback and IPO met with success in FY19.
FY19 was the second best year for disinvestments, with the government raising Rs 84,179 crore, the best year being 2017-18, which saw over Rs 1 lakh crore being raised. ETFs brought in a major share of divestment proceeds at Rs. 45,080 crore (54 per cent), followed by CPSE-to-CPSE sales, which accounted for Rs.15,834 crore (19 per cent), public offers (IPOs and OFS) at Rs. 12,566 crore (15 per cent), buybacks at Rs 10,682 crore (13 per cent) and sale of shares to employees at Rs 17 crore.
