150-175 IPOs are expected in 2008

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150-175 IPOs are expected in 2008

The top 6 equity issuances in 2007 mopped up about $6.9 billion, a CNBC-TV18 analyst said. The top 6 equity issuances in 2008 are expected to mop up $10.5 billion. Assuming a similar subscription rate of about 29.5 times, they should mop up about $310 billion. Now, 106 equity issuances were seen in 2007 but about 150-175 is expected in 2008.

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Excerpts from Markets Midday on CNBC-TV18 Watch the full show » RELATED NEWS How are DCF & rep values placed for Rel Power IPO? Subscribe to Rel Power for listing gains: India Cap Mkts AI public issue likely in 2nd half of 2008: Praful Patel Porwal Auto should list at discount Nifty BSE | NSE 25/05/12 Are Mutual Funds betting on Nifty? Other Stocks in this news Idea Cellular |

By Anichya Shah, CNBC-TV18

2008 is expected to be a blockbuster year for the primary markets space. Indian markets witnessed 106 new equity offerings worth about USD11 billion in 2007. I am just going to draw some parallels to 2007. Last year, about USD 3.5-4 billion came in from the FIIs space. Of the net FII inflow of about USD 17.4 billion, about 20-22% has gone into the primary market.

For 2007, the overall subscription for all these 106 IPOs stands at about USD 327 billion, or about Rs 13 lakh crore. This works out to an oversubscription amount of about 29.5 times for all these IPOs.

In 2008, CLSA estimates that the top15 IPOs will draw about USD 14.5 billion, a good USD 4.5 billion over the equity issuance inflow of 2007. As per Prime Database estimates, about Rs 75,000 crore is the total amount of money that will flow into 2008. This is about USD 19 billion or almost double the amount of primary market money from 2007. Assuming constant FII inflow of about 30-35%, we should see about USD 5.5-8 billion coming in from FIIs in 2008.

The scale and number of IPOs have definitely increased or are going to increase in 2008. The top six equity issuances in 2007 mopped up about USD 6.9 billion. The subscription amount on these was about USD 160 billion. The top six equity issuances in 2008 are expected to mop up USD 10.5 billion. Assuming a similar subscription rate of about 29.5 times, they should mop up about USD 310 billion. Now, 106 equity issuances were seen in 2007 but about 150-175 is expected in 2008.

In 2007, there were only two equity issuances ‑ the ICICI FPO and DLF ‑ which mopped up over a billion dollars. Idea Cellular was another strong stock. In 2008, There are about 10 IPOs that are expected to mop up over a billion dollars. Some of the huge ones include Reliance Power IPO , which opens tomorrow, USD 3 billion is the amount it expects to mop up. JSW Energy USD 1 billion, Sterlite Power about USD 2 billion, Emaar MGF and UTI AMC are some of the other big names.

Last time when the markets did absorb these IPO giants, liquidity was a flush. We should see a fair bit of fresh equity issuances. It will be interesting to see whether the market absorbs it as smoothly as it did in 2007.

The market estimates that the bulk of IPOs or about three-fourth of this USD 19 billion should come in the first six-months.