Is the primary capital market reviving? The reality is that this has still not happened, though this may not be far away. According to Prithvi Haldea of Prime Database, in the seven months of the current fiscal, only three banks and Maruti have together collected just Rs 1,713 crore and another five companies, all of them small, have raised a meagre Rs 75 crore. This of course, is better than the two preceding fiscal years, which had seen only six IPOs each.However, according to Haldea, it is nowhere near a number that could even suggest a revival, nor is it in line with the expectations of revival that were raised due to the rally in the secondary market despite it being now in its fifth month. Nevertheless, the pipeline according to Haldea appears to be extremely strong. Over 100 IPOs are in active pipeline and this includes only such companies that have announced their plans in the recent past. These aggregate, even by an underestimation, to a phenomenal Rs 25,000 crore. What has, in fact, happened is that the few IPOs that have hit the market have received huge response from the investors (but that has been more because of the safety factor attached with the PSUs and banks who had a track record) and that this combined with the sustained rally in the secondary market has re-awakened several potential issuers. Healthy scenario • Rs 1,788 crore has been raised by 10 companies so far • Rs 25,000 cr to be raised by 100 companies It may be recalled that in the last two years, similar revival sentiments had been expressed consequent to the successful floatations of Bharti Televentures and I-Flex and that a strong pipeline was indeed evidenced. The poor state of the secondary market, however, froze the potential issuers.According to Haldea, normally the IPOs are floated in stable, if not buoyant, secondary market conditions. Once the market gets a feel that the rally is going to continue, the IPO planning exercise commences.Significantly, the IPO market presently is ready, but only for ‘good’ companies at ‘reasonable’ prices, according to Haldea. This is because of the bad experiences of the mid 90s, compounded by the losses incurred in most IPOs of the previous 3 years and the securities scam of 2001, all of which have made the investors prefer safety, as represented by debt Little wonder, most companies in the recent past have deliberately under-priced their IPOs, leading not only to healthy oversubscriptions but also to handsome post-listing gains to the investors.That the primary market revival is yet to happen is proven by the fact that as per Prime, as on November 1, the prospectus either filed with Sebi or holding approval show only two big issues—Rs 150 crore of Indraprastha Gas and Rs 120 crore issue of TV Today, the rest 16 being small offerings. Most mega issues in the pipeline are hence at least 3-4 months away.The forthcoming IPOs as per the IPO-Alert database operated by PRIME can be broadly classified into three segments-public sector undertakings, banks and private sector corporates. At the top are PSUs. Three kinds of offerings could come from PSUs: divestments, fresh capital raising and residual sale. In the first two categories are the six oil majors —IOC (Rs 1,500 cr), BPCL (Rs 3,500 cr), Guru Govind Singh Refinery (Rs 500 cr), Gail (Rs 200 cr) Oil India (Rs 300 cr) and Petronet LNG.
