A total of Rs 56,440 crore was raised through the public equity markets in FY’19, a year marked by volatile stock market trends alongside underlying sluggishness in corporate investments. This amount was 68 per cent lower than Rs 1.75 lakh crore that was raised in the preceding year, according to Prime Database.
The drop in the cumulative equity numbers was primarily on account of a sharp slowdown in fundraising through IPOs — a drop of 81 per cent from Rs 83,767 crore raised in FY’18 to just Rs 16,294 in FY’19. Significantly, of the total IPO amount of Rs 56,440 crore, the amount raised through fresh capital was only Rs 22,255 crore, or 39 per cent of the total, with the remaining Rs 34,185 crore being offers for sale.
In contrast to the sluggish sentiment in the equity markets, public bonds saw renewed momentum, with 26 issues raising Rs 36,715 crore — marking a five year high. The amount mobilised in FY’19 was seven times higher than the Rs 5,167 crore raised last year. The equity figures include IPOs, FPOs, OFS issues, QIPs, InvIT, ReITs and IDRs
Fund raising in 2019-20 is going to be significantly impacted by the outcome of the general elections, according to Pranav Haldea, Managing Director, Prime Database. “While there are 64 companies holding SEBI approval wanting to raise over Rs 63,000 crore and another 8 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,” Haldea said. Already in FY’19, nine companies that were looking to collectively raise Rs 6,495 crore let their SEBI approval lapse, despite approvals being valid for a period of one year. According to Haldea, if the elections throw up a fractured mandate, many more companies are likely to allow their approval to lapse.
FY’19 saw fundraising through IPOs drop by a huge 81 per cent from Rs 83,767 crore in the previous financial year to just Rs 16,294 in 2018-19. 14 main-board IPOs came to the market collectively raising Rs14,674 crore* (during FY’18, 45 IPOs raised Rs 81,553 crore). The largest IPO, according to the data, was from HDFC Asset Management for Rs 2,800 crore. The average deal size was a high Rs 1,048 crore. Offers for sale by promoters at Rs 9,458 crore accounted for a further 64 per cent of the IPO amount.
Out of the 14 IPOs, 9 companies had anchor investors, which collectively subscribed to 26 per cent of the total public issue amount. The domestic institutional investors played a significant role as anchor investors, with their subscription amounting to 13 per cent of the amount, same as the 13 per cent from FPIs.
The response to IPOs was further affected by poor listing performance of IPOs of the year, Haldea said. Of the 13 IPOs that got listed, only 2 gave a return of over 10 per cent (based on closing price on listing date). HDFC Asset Management gave a return of 65 per cent followed by RITES at 15 per cent. The year, again, witnessed significant activity in the SME platform — there were as many as 106 SME IPOs, which collectively mobilised a total of Rs 1,620 crore (previous year 154 IPOs for Rs 2,213 crore).
In the public bonds market, the largest issues were Dewan Housing Finance (Rs 10,945 crore) followed by Shriram Transport Finance (Rs 3,649 crore) and Tata Capital Financial Services (Rs 3,373 crore).