Business Daily from THE HINDU group of publications
Friday, Dec 15, 2006

Cross Currency

Group Sites

Home Page - IPOs
Markets - Stock Markets
`Huge appetite, enough money for public issues'

Deeptha Rajkumar

Prime Database MD sees larger amounts being raised

Retail investors have never had it so good with most of the issues quoting at premiums to the offer prices.

Mumbai , Dec. 14

The calendar year 2006 saw more than 70 companies hitting the market to raise more than Rs 20,000 crore through equity offerings against almost Rs 10,000 crore raised by 53 companies in 2005.

And this is just for starters, say industry watchers.

"There is a significant amount of money waiting to find its way to good investment opportunities," said Mr Prithvi Haldea, Managing Director, Prime Database.

He said while the Indian economy was still small in terms of listed regime, fundamentals remain good.

"With the quality of markets improving dramatically and the huge amount of due diligence being done by the stock exchanges and SEBI, we may be seeing fewer issues coming to the market compared to the 90s, but larger amounts are being raised. In fact, once power, port or road projects really take off we could be looking at almost Rs 50,000 - 60,000 crore being raised via the capital market route," he added.

Given the quantum of money raised being on the upswing, retail investors have never had it so good with most of the issues quoting at premiums to the offer prices.

Mix of issues

"We have seen a good mix of issues — large-cap to mid- to small-cap — across various sectors," said a senior official with a leading domestic brokerage. A section of the market, however, expressed concerns over liquidity.

Some opine investors are selling in the secondary markets for subscribing to issues in the primary market. Industry experts, however, believe otherwise and maintain there is no churn in the market in terms of liquidity.

"The market breadth has improved substantially. We have seen existing FIIs increase their investments across all sectors (listed and IPOs) and a lot many new FIIs are coming in. The difference is in that till now we have seen more of opportunistic gains but now Indian companies have taken transactions to US investors. As such, one can see overall improvement in liquidity," said the Vice-President, Equity, of a leading domestic brokerage.

"IPOs are not hurting the secondary market," said Mr Haldea. He also does not subscribe to the theory that "liquidity is drying up."

"The two are not linked. Given our market breadth, there is huge appetite and enough money to subscribe to these issues," he added.

Industry experts maintain that given the levels today, a lot of private equity investors are sitting on good exiting opportunities.

Going forward, sources predict Government could potentially be a large source for the IPO market.

While the going looks good, with the capital market all set to witness a surge in equity offerings (including some of the largest ever) in the new calendar year, market participants highlight one salient feature by which to validate an issue.

"The retail investor needs to look at the QIB subscription. If the response is overwhelming, it is a clear indication of the quality of the issue," said Mr Haldea.

More Stories on : IPOs | Stock Markets

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page


Stories in this Section
PM seeks political help for an economic push

ID number for mutual fund investors
Coal India may opt for re-categorising of consumers
Tata Motors, Fiat to invest Rs 4,000 cr in new facility
Car makers hold divergent views over excise duty sops
Infosys unveils new HR practices
Sensex on the rise, gains 305.82 points
Bharti Airtel: Close watch
ITC: Rapid consolidation
Punjab National Bank not to hike lending rates now
SBI holding in associates at 51 pc: Panel okays move
Match me if you can, Govt tells pvt players
`Huge appetite, enough money for public issues'

The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription
Group Sites: The Hindu | The Hindu ePaper | Business Line | Business Line ePaper | Sportstar | Frontline | The Hindu eBooks | The Hindu Images | Home |

Copyright 2006, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line