Mega-IPOs to soon hit market

The secondary market bull run always leads to a bull run in the IPO market. However these are early days,and we have to see if this is sustained, said Prithvi Haldea,chairman and managing director of Prime Database. Nearly 37 initial public offers with a combined size of Rs 38,000 crore have been holding Sebi approval but have been waiting for the market sentiment to approve,he said. What we have till now are mainly small issues. Larger companies will watch the market for another 10-15 days before taking a decision on their offers, he said.

Those on the anvil include the Rs 14,000-crore issue by state run Coal India Ltd as well as those by private sector firms such as Reliance Infratel that will raise Rs 5,000 crore. A host of real estate companies are also set to tap the markets.

The primary market is showing a robust mood with a long list of IPOs scheduled this week. The liquidity,which was flooding the secondary market,is all set to flood the primary market as well, said Jagannadham Thunuguntla,equity strategist at SMC Global.

In fact,enthused by the robust market conditions,some state-run firms including Steel Authority of India Ltd are also keen to advance their public offers. Market conditions are buoyant. If it remains like this,we may consider advancing the follow on public offer by SAIL in the calendar year 2010, steel secretary Pradeep Kumar Mishra said. The state run steel miner was earlier planning to launch its FPO that will raise Rs 8,000 crore in February but now may push it forward to December.

Wth improved market conditions,share sales by other public sector firms will see aggressive interest and fetch high valuations. While the governments decisions will not be solely based on market conditions,it does help raise funds more easily, Thunuguntla said. As part of its disinvestment programme,the government has lined up public offers by six state-run firms in the next few months,starting with the mega IPO of Coal India. This will be followed by stake sales in SAIL,Hindustan Copper,Manganese Ore India,Shipping Corporation of India and PowerGrid Corporation,as the government tries to earn Rs 40,000 crore from disinvestment proceeds.

However some analysts are concerned that the absence of domestic institutional investors,high networth individuals and retail investors in the market rally could affect public issues. The Sensex has crossed 20,000 only because of frenzied buying by foreign institutional investors. Retail participants are still missing and this could impact IPOs, pointed out Kishore P Ostwal,chairman and managing director of CNI Research.