Indeed, most IPOs this year have been mid-sized and the street is yet to see larger companies hit the market. (Graphic: Sanjay Tambe)
India’s IPO market could well see R10,000 crore being mopped up for the first time in six years following the good response the InterGlobe Aviation initial public offering received on day one, report Ankit Doshi and Pavan Burugula in Mumbai. The IPO was subscribed 0.87 times on the first day of the issue, stock exchange data showed.
After a four-year lull, Indian companies have raised about R7,500 crore via IPOs so far in 2015. Should the issues of InterGlobe and SH Kelkar be successful, fund-raising via this route could hit around R11,100 crore this year, making it only the seventh time ever that the five-digit mark has been crossed, data from Prime Database showed.
However, as Prime Database CMD Prithvi Haldea pointed out, the last few issues have seen limited participation by foreign portfolio investors and retail investors. “Of the 16 IPOs so far in 2015, retail books of six issues have failed to get fully subscribed,” Haldea observed.
Indeed, most IPOs this year have been mid-sized and the street is yet to see larger companies hit the market. Dharmesh Mehta, MD and CEO, Axis Capital, believes the primary market has much larger potential and that Rs 10,000-11,000 crore is a small number. “Large IPOs are typically seen in the infra space but that is not in good shape right now, so we need to wait,” Mehta said.
Earlier this month, the world’s largest operator of mobile phone services, Vodafone Group, announced its plans to list its Indian subsidiary. The rise in emerging markets (EM) as an asset class helped India’s primary market mobilise more than Rs 1 lakh crore between 2007 and 2010. Data showed that Indian corporates raised Rs 37,534 crore through IPOs in 2010 — the highest ever. However, in the aftermath of the global financial crisis, more than 60 companies scrapped their IPO plans between 2011 and early 2014 despite valid regulatory approvals, leading to expiration of fresh paper worth Rs 65,000 crore, data showed.
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