The year 2013 highlights the continuing dismal state of fund raising through the IPO route by unlisted companies in the last three years
The year 2013 ended with a mobilisation of only Rs1,619 crore through IPOs according to Pranav Haldea, managing director of PRIME, the country’s premier database on primary capital market. This was the lowest-ever mobilisation in the last 12 years, the previous low being in 2001 when only Rs296 crore had been raised through IPOs. The highest-ever mobilisation through IPOs was as recent as in 2010 at Rs37,535 crore.
The year 2013 highlights the continuing dismal state of fund raising through the IPO route by unlisted companies in the last three years with 2011 at Rs5,966 crore and 2012 at Rs6,938 crore.
Number of companies and amounts raised through IPOs in the last 12 years are as follows, according to Prime Database:
YEAR | NO.OF | AMOUNT |
2002 | 6 | 1981 |
2003 | 12 | 1670 |
2004 | 25 | 13121 |
2005 | 53 | 9990 |
2006 | 73 | 19852 |
2007 | 100 | 34179 |
2008 | 37 | 16904 |
2009 | 20 | 19544 |
2010 | 64 | 37535 |
2011 | 37 | 5966 |
2012 | 25 | 6938 |
2013 | 38 | 1619 |
There were just 3 main-board IPOs during the entire year: Just Dial: Rs919 crore, Repco Home Finance: Rs270 crore and V-Mart Retail: Rs94 crore (previous year 11 IPOs for Rs6,835 crore). The year, however, witnessed a flurry of activity on the SME platform; there were as many as 35 IPOs which collected a total of Rs335 crore (previous year 14 IPOs for Rs103 crore).
According to Haldea, the market has really not been IPO-friendly for last three years due to a variety of factors. This includes overall poor sentiments, secondary market volatility, promoters not getting the valuations they think they deserve, apprehensions of regulator’s views on valuations, lack of appetite for equity of big-time issuers from the infrastructure sector, especially power, telecom and real estate. In addition, the government has also been unable to push through its divestment programme.
Finally, the biggest disappointment for the primary market has again been the lack of divestments by the government. Despite a huge target of Rs40,000 crore for FY 2013-14 and continuing announcements, with 9 months already gone, only Rs2,964 crore, or just 7% of the target) has been achieved. Again, like in previous years, bulk of the divestments may take place in the last quarter of the fiscal.
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