Mumbai: Indian companies and the central government could raise about Rs 2 lakh crore this year in equity and equity-linked offerings, but uncertain secondary market conditions could still throw some plans off schedule, according to investment bankers.
Fundraising would be more or less similar to what was raised in 2017 which was about Rs 2 lakh crore and was the best year since 2007 for companies and promoters.
The pipeline of fundraising, which includes initial public offerings (IPOs), qualified institutional placements (QIPs), rights, follow-ons and ETFs, is very strong though timing could be vary depending on how secondary markets behave.
“I expect fund raising activity to be strong amidst challenging capital market conditions. While government has talked of a Rs 1 lakh crore disinvestment programme, the private sector pipeline of fund raising could be of an equal size if not more,” said S Ramesh, CEO, Kotak Investment Banking. “Unlike last year, the current year could see issuances from diverse sectors such as infrastructure, power, real estate, consumption and healthcare, in addition to BFSI.
Four big IPOs — Hindustan Aeronautics, Bandhan Bank, ICICI Securities and Bharat Dynamics — are expected to hit the primary market this month to raise about Rs 12,000 crore. About 17 companies have received market regulator’s approval to raise about Rs 25,000 crore through initial public offers (IPOs) while another 19 others have filed their draft red herring prospectus (DRHP) with Sebi.
Among other companies expected to hit the capital market in the next few months includes ACME Solar Holding, Indian Renewable Energy, Lemon Tree, Reliance General Insurance, CMS Info Systems and Barbeque Nation.
“A volatile secondary market will have an impact on the primary market but it’s good to have IPOs in a falling market as the valuations would be reasonable,” said Dharmesh Mehta, managing director of Axis Capital.
Half a dozen companies have raised as much as Rs 3,600 crore through IPOs in the first two months of the year, while nine others have raised Rs 6,000 crore through QIPs. On the other side, five companies have raised Rs 16,700 crore through right issues.
Everything depends upon market momentum, how the secondary market pans out. Select issues will do well,” said Vikas Khemani, president, Edelweiss Securities.
Calendar 2017 was a watershed year for Indian primary market as close to Rs 200,000 crore was raised across all equity formats. The banking and financial services sector dominated fundraising but the mix this year is expected to be different.
Renewables, thermal power, road, real estate, consumption and banking, financial services and insurance (BFSI) are expected to dominate this year compared with 2017 when six IPOs fromBFSI raised more than Rs 40,000 crore out of Rs 65,000 crore worth of IPOs.
“The pipeline for equity issuance is quite robust and we expect similar trend to continue even in the next fiscal year. Having said that, we anticipate a lot of corporates will rush in to complete fund raising issuance by September/ October before the election fever sets in,” said Atul Mehra, MD, JM Financial.
Equity and equity-linked issuance by Indian companies raised $28.5 billion in 2017, a 208.0 per cent increase compared with 2016. This is the highest annual amount since 2007, in terms of proceeds, when $31.2 billion was raised. During the fourth quarter of 2017, total ECM proceeds reached $11.1 billion, a 59.6 per cent quarterly increase in proceeds from the third quarter of 2017, and saw the highest quarterly level since the second quarter of 2007 ($13.1 billion), a Thomson Reuters report said.