IPOs garner Rs 3055 cr, but retail investors missing

In terms of response, most of the issues, according to Prime, failed to generate investors’ interest, unlike last year when almost all issues were hugely oversubscribed. Two bookbuilding issues, Sip Tecnologies and Creative Eye, had to be even called off due to lack of investor’s support, though Creative Eye entered the market subsequently with a lower price. In addition, three issues had to refund the application money having failed to mobilise the minimum subscription (Arraycon, Oceana Software and GeekayImaging) while three issues (IT&T, Pritish Nandy and Hughes Tele.com)devolved on the underwriters. The 2 issues from banks (Indian Overseas Bankand Vijaya Bank) even at par did not excite the investors.

Even then the mobilisation in 2000 was nowhere near the year-beginning estimate of Rs 20,000 crore. Even compared to the past, it was significantlylower than Rs 13,887 crore raised in 1995 or even Rs 5,733 crore mobilised in 1996.

According to Prime, the year was dominated by the ICE sector. Of the total Rs 3,055 crore, a high Rs 2016 crore or 66 per cent was accounted for by the ICE sector through 110 issues. While IT had led last year, telecom took the top position this year at Rs 834 crore with 3 issues (previous year Rs 75 crore, 1 issue). This was followed by IT at Rs 710 crore with 94 issues (previous year Rs 1,376 crore, 22 issues) and media at Rs 472 crore with 13 issues (previous year Rs 49 crore, 1 issue). In addition an amount of Rs 489 crore, or 16 per cent, was taken up by 4 pharma issues. Thus, the `knowledge’ sector accounted for 82 per cent of the year’s total mobilisation. Significantly, the mobilisation by the much-hyped IT sector fell by a whopping 48 per cent.

Of the balance, Rs 211 crore was raised by 2 banks, Rs 168 crore by 2 packaging companies and Rs 113 crore by 4 NBFCs. The contribution of othersectors was minimal: 1 textile company (Rs 25 crore), 1 plastics company(15), 1 medical equipment company (14), 1 electronics company (2), 1 teacompany (2) and 1 castings unit (1).

"Looking at the year another way, the traditional manufacturing sector, quite like the previous year, was almost absent from the market with just 6 issues raising a meagre Rs 210 crore," as per the Prime report.

According to Prithvi Haldea of Prime, the year began on a confident note and the first quarter witnessed huge oversubscriptions, aided by Sensex reaching an all-time high. However, the NASDAQ crash in April put brakes on this spree. Most issues which had been made in the preceding year saw their prices tumbling down to much lower levels than their offer prices. Investors became nervous about valuations and response to issues started falling, leading to scores of promoters postponing their issues. A minor upsurge of sorts came only towards the end of the year courtesy the media sector.

During the year under review, the primary market, by numbers, closed with 128 issues, up 236 per cent from 38 in 1999, though nowhere near the high of 1444 issues in 1995. The rise in the number was primarily courtesy the re-emergence of small issues. For example, of the 94 issues in the IT sector, as many as 84 were of less than Rs 10 crore each, of which 66 were of even less than Rs 5 crore each.

The bookbuilding route, according to Prime, gained increasing ground duringthe year. It may be recalled that the first-ever public equity issue throughthis route was launched in 1999 by Hughes Software followed by just one moreissue (HCL Technologies) in that year. The year 2000 witnessed as many as 13companies using this route of which the Rs 100 crore plus issues included Hughes Tele.com (749), Cadila (372), Shree Rama Multi-Tech (164), MascotSystems (144) and Mukta Arts (100).

In addition to equity, public issues of debt continued to be made during theyear by the financial institutions. However, the debt mobilisation fell by asignificant 45 per cent to Rs 3107 crore, down from Rs 5640 crore in 1999(it was Rs 6523 crore in 1998). The total mobilisation through public issuesof both debt and equity, as such, recorded a 22 per cent fall, down fromRs 7877 crore in 1999 to Rs 6160 crore in 2000.

The increasing belief that the primary market has revived needs to bequestioned. According to Prime, the primary market, in fact, should be considered to have revived only when there are more number of issues, theseare from a wider spectrum of industries, and when investors respond favourably to most of such issues.