Capital-starved India Inc has been on a fund raising spree in the period marked by the run-up to the Budget, which is set to be unveiled on July 6.
The year 2008 proved to be a disaster, as far as capital-raising activity was concerned, and the first two months of the current year too looked to go down the same road, till it was saved by the bull rally starting March 9.
With markets on a new high, corporates believe that this was the right time to go in for IPOs, FPOs, ADRs/GDRs and QIPs, as the case may be, to source some much-needed funds. Through their actions they may well have signaled, either that they are desperate for cash, or that they are very uncertain what the final form of the Budget may be.
To pre-empt any negative sentiments that may flow via the Budget, corporates went in for the capital-raising exercise and successfully managed to garner Rs 6,533 crore in the last week of June alone, which amounted to over 56 per cent of the Rs 11,714 crore that was raised during the April-June, 2009 quarter.
To put the uncertainty in the mind of India Inc in perspective, they managed to collect a sum of Rs 872 crore during the January-March quarter.
That they may be right in not waiting for the Budget proposals to be aired, but only the post-Budget period can have the final say on that, has been bolstered by the fact that the phenomenal run by the markets, starting March 9, has petered out in June, with the Sensex finishing flat for the month. The only positive takeaway for the month was that the May highs were not compromised.
According to Prime Database, the quarter saw collections from 1 IPO (Rs 278 crore), 1 FPO (Rs 23 crore), 3 rights (Rs 29 crore), 3 ADRs/GDRs (Rs 125 crore) and 10 QIPs (Rs 11,259 crore). As can be seen, QIPs cornered over 96 per cent of the total money mobilized.
Mahindra Holiday was the solitary IPO in the entire quarter, while Rishabdev Technocable was the solitary FPO during the quarter. The leading QIP issuers during the quarter included Unitech (Rs 4,410 crore), Indiabulls Real Estate (Rs 2,656 crore), HDIL (Rs 1,674 crore), Sobha Developers (Rs 526 crore), Shree Renuka Sugars (Rs 506 crore) and PTC (Rs 500 crore).
In the preceding quarter (January to March 2009), a tiny amount of Rs 872 crore had been raised. This included 1 IPO, 4 rights and 2 GDRs/ADRs (with no QIPs). As such, compared to the preceding quarter, the June quarter has witnessed an increase of over 13 times.
On the other hand, in the same quarter of the preceding year (April to June 2008), only Rs. 2,623 crore had been raised. This included 13 IPOs, 2 rights, 7 GDRs/ADRs and 1 FCCB issues (and no QIPs). As such, compared to the same quarter of the preceding year, the recent June quarter has witnessed an increase of over 4 times.
According to Prime Database’s Prithvi Haldea, “Expectations from the Budget are huge and as such its impact on the market too shall be enormous. The capital raising plans of India Inc are totally dependent upon the state of the secondary market that will emerge after the Budget. If the Budget disappoints and the secondary market crashes, companies would have to yet again put their plans on hold.”
On the IPOs/FPOs front, the first to hit the market would be the 19 companies who have been holding SEBI approval to raise Rs.8,959 crore. This includes two PSUs -- NHPC (Rs 2,500 crore) and Oil India (Rs 1,400 crore). Also in the list are Adani Power (Rs 2,200 crore), Godrej Properties (Rs 750 crore) and Pipavav Shipyard (Rs 700 crore). The second market-bound group would be the 15 companies that are awaiting SEBI approval to raise Rs 2,186 crore. This list has only small issues, except Great Eastern Energy (Rs 700 crore). In addition to the above may be other PSU divestments through the IPO/FPO route.
On the rights front, the first to hit the market ought to be the 9 companies that have been holding SEBI approval to raise Rs 1,605 crore. This includes Fortis Healthcare (Rs 1,000 crore) and Wire and Wireless (Rs 450 crore). After this exercise, another one would follow consisting of 14 companies that have filed with SEBI and are awaiting approval to raise Rs 3,637 crore, including Religare Enterprises (Rs 1,850 crore) and TV18 (Rs 510 crore).
Also in the pipeline are QIPs. Since January 2009, as many as 50 companies have already announced their plans to raise money through this route. It includes biggies like Hindalco, Cairn, GVK Power, HDFC, JSW Steel, Essar Oil, Lanco Infratech, Parsvnath and Omaxe. The total amount planned to be raised via QIPs exceeds Rs 60,000 crore.
A new money-gathering facility may also get featured on Indian markets. This is the Indian Depository Receipts (IDR) -- the first IDR may happen in the coming quarter.
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