The calendar year 2020 has seen the highest ever fundraising through the public equity markets, Pranav Haldea, Managing Director, PRIME Database Group, has said. India’s leading information provider on the capital market, the group runs primedatabase.com.
"Despite almost the entire calendar year 2020 being overshadowed by the pandemic, all-time high fundraising through the public equity markets was witnessed at Rs 1,77,468 crore. This was 116 percent higher than Rs 82,241 crore raised in calendar 2019," said Haldea.
The previous highest amount raised in a calendar year was Rs 1,60,032 crore in 2017.
Strong retail participation in IPOs, huge listing gains and the highest-ever amount raised through QIPs and InvITs/ReITs were the key highlights of the year.
According to Haldea, contrary to the despondency due to the pandemic, 15 main-board initial public offerings came to the market, collectively raising Rs 26,611 crore. This was an increase of 115 percent from the Rs 12,362 crore raised through 16 IPOs in 2019.
The largest IPO in 2020 was from SBI Cards for Rs 10,341 crore. The average deal size was Rs 1,774 crore.
Five of the 15 IPOs that hit the market had a prior PE/VC investment. Offers for sale by such PE/VC investors at Rs 8,026 crore accounted for 30 percent of the total IPO amount. Offers for sale by promoters at Rs 7,880 crore accounted for another 30 percent of the IPO amount.
Out of the 15 IPOs, 13 companies had anchor investors, which collectively subscribed to 29 percent of the total public issue amount. The domestic institutional investors played a significant role as anchor investors, with their subscription amounting to 13 percent of the amount. This, however, was lower than the 16 percent from FPIs, said Haldea.
Activity in the SME IPOs segment declined in 2020 in comparison to 2019. There were only 27 SME IPOs, which collected a total of Rs 159 crore in comparison to 51 IPOs in 2019 that moped up Rs 624 crore.
According to primedatabase.com, offers for sale (OFS) through stock exchanges, which is for dilution of promoters’ holdings, saw a decline from Rs 25,999 crore raised in 2019 to Rs 21,458 crore in 2020.
Of this, the government’s divestment accounted for Rs 10,545 crore, or 49 percent, of the overall amount.
FPOs made a comeback after several years. This was primarily on account of the mega Yes Bank FPO (follow-on public offer) that raised Rs 15,000 crore. Two companies mobilised Rs 15,054 crore through FPOs, Haldea said.
Twenty-six companies mobilised Rs 84,501 crore through qualified institutional placements (QIPs), the highest ever in a calendar year. This was 140 percent higher than Rs 35,238 crore raised in the previous year, Haldea said.
The largest QIP of 2020 was from ICICI Bank, raising Rs 15,000 crore, accounting for 19 percent of the total QIP amount. QIPs were dominated by banks, non-banking financial companies (NBFCs) and telecommunication firms. They accounted for 84 percent (Rs 67,781 crore) of the overall amount.
The year 2020 also Embassy Office Parks raise Rs 3,685 crore, first-ever real estate investment trust (ReIT) QIP.
The amount raised through InvITs and ReITs saw an increase of 271 percent to Rs 29,715 crore from Rs 8,008 crore in 2019.
Of the total amount of Rs 1,77,468 crore, the fresh capital amount was Rs 1,29,418 crore (73 percent), the remaining Rs 48,050 crore being offered for sale.
The year 2020 has been a dismal year for divestments, with only Rs 42,815 crore being raised by the government.
According to Haldea, ETFs at Rs 16,500 crore (39 percent) was the most used mode followed by CPSE (central public sector enterprises) sale at Rs 13,883 crore (32 percent), public offers (IPO of Mazagon Dock and OFS of Bharat Dynamics, HAL, IRCTC and RITES) at Rs10,988 crore (26 percent), Buybacks (Mazagon Dock, Security Printing & Minting Corp, RITES, KIOCL, HPCL, NTPC and NMDC) at Rs 844 crore (2 percent) and Remittances from SUUTI at Rs 600 crore (1 percent).
For 2020-21, the government has set a target of Rs 2,10,000 crore. Of this, only Rs 10,861 crore, or 5 percent, has been achieved so far.
Reduction in the government’s holding in 23 listed CPSEs to 75 percent, a mandatory SEBI requirement, can contribute to over Rs 18,000 crore of this.
Further, the government also drew a roadmap for several unlisted profit-making CPSEs to get listed. Lastly, the government has also identified 45 CPSEs for strategic sale.
Outlook for 2021
According to Haldea, the continuing buoyancy in secondary markets as also the listing performance of IPOs in the last few months have provided an impetus to the primary market.
The IPO pipeline continues to remain strong, with 28 companies holding SEBI approval wanting to raise nearly Rs. 28,706 crore and another 7 companies wanting to raise nearly Rs. 4,410 crore awaiting SEBI approval.
Public Bonds: Public bonds market saw a near 60 percent decrease with 20 issues raising Rs 7,485 crore in comparison to 35 issues raising Rs 18,637 crore last year.
The largest issue was from Tata Capital Housing Finance and Muthoot Finance raising Rs 2,000 crore each.
Debt private placements: Amount raised through debt private placement reached an all-time high of Rs 7,51,395 crore (as of December 24, 2020), up from Rs 7,09,979 in 2019.
Rights Issues: Mobilisation of resources through rights issues, according to primedatabase.com, recorded an increase in 2020.
By amount, the period saw Rs 64,984 crore being raised, which was higher by 25 percent than Rs 52,053 crore that was raised in 2019 and the highest ever amount raised through rights.
This was primarily on account of one large issue of Reliance Industries (Rs 53,124 crore).By number, the year saw 20 companies using the rights route in comparison to 12 companies in the previous year.