IPO arena hots up; cos plan to raise Rs 50K cr in 2010

NEW DELHI: Domestic companies are expected to embark on a mega fund raising spree this year with plans to raise over Rs 50,000 crore by way of public offers, driven by the sharp recovery in the stock market.

The revival in the Initial Public Offer (IPO) market in 2009, is likely to get a boost this year as 50 companies have already filed the draft prospectus with the market regulator the Securities and Exchange Board of India (SEBI).

Indian companies had raised about Rs 20,000 crore through IPOs in 2009.

Analysts believe with the government planning to sell shares in a host of public sector companies by way of IPOs and follow-on public offers (FPOs) fund raising can go up to Rs 50,000 crore this year. "The IPO pipeline looks strong in 2010. Also the way the government is pushing ahead with the disinvestment plan, fund raising can go up to Rs 50,000 crore by the end of the year," SMC Capitals Equity Head Jagannadham Thunuguntla said.

As per the draft prospectus filed with the SEBI five companies aiming to raise over Rs 307 crore have already received the regulator's clearance for the IPO.

These companies have to hit the market within a year of receipt of SEBI clearance. Further, 45 others are queuing up to raise about Rs 35,000 crore and are awaiting SEBI approval. The rest is expected to come from disinvestments the government plans to undertake.

The IPO market is on fire post the decision of the UPA government, which has come to power for the second term, to dilute stake in PSUs as investors were waiting for these IPOs to test the primary market. As part of its disinvestment plans the government intends to raise over Rs 20,00 crore by way of FPOs of NMDC, SAIL, NTPC, and REC.

Besides these, some of the prominent private companies which have their IPOs lined up include Jindal Power (Rs 7,200 crore), BPTP (Rs 1,500 crore), Reliance Infratel (5,000 crore), Emaar MGF (Rs 3,800 crore), Sahara Prime (Rs 3,450 crore).

Others which are waiting in the sidelines include Sterlite Energy (Rs 3,000 crore), Lodha Developers (Rs 2,500 crore), Jaypee Infratech (Rs 1,650 crore) and DB Realty (Rs 1,500 crore). "Of the total IPOs that are in the pipeline, as many as 16 are from real estate sector. However, their success is a bit doubtful as the appetite for realty IPOs are currently less," Thunuguntla added.

Primary market fund raising in 2008 saw 30 IPOs mopping up Rs 17,000 crore, but shares of many these companies gave the investors modest-to-good returns. The experience was even better in 2007, when about 100 of them raised over Rs 32,000 crore and showered the investors with impressive returns.