The funds raised through initial public offering have dipped to historic low despite the investor optimism on the growth prospects of the country.

Speaking at the capital market submit organised by CII, UK Sinha, Chairman, SEBI, said in the first 11 months of this financial year, total money raised from primary market was ₹1,500 crore, one of the lowest in the history of this country and is one fifth of the total money raised last year, which itself was not a great year.

“I had series of meetings with various investor groups and came to know that the pipeline of new issue is also not that good. We should deliberate when India is expected to register growth of 7 per cent or more why there is no appetite for raising funds from the capital market,” he said.

Domestic institutions lag

This financial year was great for foreign portfolio investors. They have invested about $46 billion so far and they may add another billion by end of this fiscal. It will be an all-time record. In contrary, the domestic institutional investors’ investment in the same period has been in the negative.

Interestingly, he said, this is the period when MF industry has been able to garner net inflow of over ₹82,000 crore for investing in equity market.

“When the mutual funds can raise so much money for investment in equity market, why the domestic institutions’ net investment in equity market is negative and see whether there is any risk involved in this whole process,” he asked.

While SEBI has always welcomed and made things smooth for foreign investors and Budget has also provided some concessions, for a vibrant capital market and larger growth of the economy, domestic institutions must play a big role, he said.

Pension fund

Despite Ministry of Finance giving permission to EPFO to invest 15 per cent of the corpus in equity, the EPFO has not made significant investment in equity market. On the other hand, quite substantial amount of fund from foreign pension funds are flowing into equity through the FDI route.

The Budget has given the members of EPFO an option to choose between EPFO and NPS. Once Government gives effect to this provision, I m sure that long-term fund will flow into the equity market.

Signing off with a message to CII, he said: “the good old practice of industry body acting as lobby should give way to a situation where the government, regulator and the industry representatives are working together for the betterment better of country and industry.”

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