India Inc lines up ~15,000-cr fundraising plans
India Inc has lined up plans to raise funds worth about ~15,000 crore over the next four to six weeks.
Buoyancy in the market, with the benchmark Sensex and Nifty at record highs, and positive sentiment towards primary issuances are giving confidence to companies and investment bankers to push ahead with their capital-raising plans.
The modes of capital mobilisation would include infrastructure investment trust, or InvIT (a new hybrid instrument that invests in infrastructure projects), initial public offerings (IPOs), qualified institutional placements (QIPs) by listed companies, and offer for sale (OFS) by the government.
Between November 2016 and February 2017, equity fundraising had taken a hit due to the uncertainty created by demonetisation. However, investment bankers say investor sentiment —both foreign and domestic— has once again turned positive to absorb the supply of new paper coming into the market.
At least two infrastructure companies — IRB Infrastructure and Sterlite Power Grid — will launch an initial offer for InvITs to raise over ~7,500 crore. While IRB Infra’s InVIT offering will hit the market on May 3, Sterlite could launch it at the end of May or June.
State-owned Housing and Urban Development Corporation (Hudco) will launch its ~1,200-crore IPO on May 8. Depository firm CDSL, cable and broadband services provider GTPL Hathway, construction company PSP Projects, and telecom equipment company Tejas Networks are among other companies planning to launch their offerings in May, according to investment banking sources.
Besides, a handful of listed companies, with board approvals in place for equity fundraising, are also in talks with investment bankers to raise resources over the next few weeks. Real estate player Brigade Enterprises’ ~500 crore QIP is likely to be closed on Tuesday. Federal Bank and Bank of Maharashtra have initiated the process to raise ~2,500 crore and ~2,000 crore, respectively, by fresh equity issuance. Also, the government might look at divesting its stake in a few public sector undertakings (PSUs) via OFS.
“We have had a few successful QIPs and IPOs. Investor sentiment is extremely positive for fund raising,” said Girish Nadkarni, managing director, investment banking, Motilal Oswal Financial Services.
In March, four companies raised ~8,700 crore by way of QIPs, of which Yes Bank mopped up ~4,900 crore.
March saw the launch of four IPOs worth ~2,940 crore, including that of Avenue Supermarts worth ~1,870 crore, while April saw only one IPO by publishing firm S Chand and Company worth ~728 crore. The Centre also successfully raised ~1,200 crore in National Aluminum Company (Nalco) by divesting 10 per cent through the OFS route.
Almost all of the recent offerings saw demand far in excess of shares on offer. “Overall, the mood around the economy and political scenario is quite bullish. Also, secondary markets continue to remain positive. Whenever the secondary market does well, the primary market gets a boost,” said Prithvi Haldea, chairman and managing director, Prime Database.
The Indian markets have rallied 15 per cent from demonetisation lows in December. The broader markets, particularly the small-cap and mid-cap stocks, have outperformed the benchmarks. The attractive valuations in the secondary market are encouraging a lot of promoters to go public, say experts.
“Conditions are conducive for fundraising. The success of recent IPOs is keeping sentiment bullish. For the momentum to sustain, future listings also have to do well. If investors lose money on new listings, sentiment could once again turn cautious,” an investment banker said, requesting anonymity.