Funds mobilised through public equity offerings in 2013 saw a rise of 25 per cent compared with last year, a primary market tracking agency has said.
“The year 2013 witnessed a raising of Rs 45,372 crore through public equity markets, which was 25 per cent higher than the Rs 36,253 crore that was raised in the preceding year,” Pranav Haldea, Managing Director of PRIME Database, said. This market includes shares sold to general public and institutions through initial public offerings, follow-on public offers, offers for sale through stock exchanges, qualified institutional placements, institutional placement programmes (IPP) and Indian depository receipts.
However, Haldea felt 2013 could have been a much better year but for the continuous deferment of several public sector offerings and volatility in the secondary market through most of the year. The year, of course, fell substantially short of Rs 99,022 crore, the highest amount that has ever been raised (in 2010).
Fund-raising in 2013 was substantially achieved through the 84 OFS through stock exchanges, the new secondary sale method allowed by market regulator SEBI last year, primarily to help promoters of already-listed companies in complying with the minimum public shareholding requirement. These offers accounted for 53 per cent of the total amount mobilised during the calendar year.
Risk-free For investors, these sales are substantially risk-free as these are from listed companies and come at a discount to the market price. However, proceeds from such sales do not go to the company for its growth, but to the selling shareholders. Offers for sale were in the limelight in the April-June quarter as companies had to meet SEBI’s deadline of June 3, 2013 for the minimum public shareholding requirement.
Another new instrument allowed by SEBI, IPP, primarily for the same purpose, saw 12 companies raising Rs 4,823 crore.
According to Haldea, the unstable political and economic climate in the country, coupled with a volatile secondary market almost through the year, resulted in a continuing lull in main board IPOs, with only three in the fray. These IPOs were from Just Dial, Repco Home Finance and V-Mart Retail. This was in comparison to 11 mainboard IPOs in 2012.