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India Inc’s fund raising via IPO in 2008 dips to 3-yr low

This article was posted on Feb 4, 2009 and is filed under Press Releases

NEW DELHI: India Inc’s capital mobilisation through initial public offering has hit rock bottom as the total amount raised via this route in 2008 aggregated to $ 4,509 million, the lowest in the last three years, says a report. Capital mobilisation through IPOs witnessed a fall both in terms of volume and value as only 44 transactions worth $ 4508.85 million were announced, global consultancy firm Grant Thornton said. Way back in 2005, however, there were as many as 64 such deals with an announced value of $ 5521.50, it added.

The total fund mopped up through IPO in 2008 was $ 4.51 billion, 18.34 per cent lower than the amount raised in 2005.

Compared with 2007, fund raising has dipped by 54.55 per cent. Fund raising activity through IPO reached its peak in 2007, when a whopping $ 9920.65 million was garnered.

Though there was a fall in both value as well as volume terms but the year 2008 saw several large IPOs across the board including Reliance Power’s $ 2.56 billion issue – the largest public issue of 2008, Grant Thornton added.

The other big IPOs in the year came from Rural Electrification Corp, IRB infrastructure developers and KSK energy ventures each raising $ 410 million, $ 236 million and $ 208 million respectively.

The average size per IPO for 2008 increased from $ 98.22 million in 2007 to $ 102.47 million for 2008. The amount of money raised in 2008 was $ 4.51 billion, compared with $ 9.92 billion and $ 5.89 billion in 2007 and 2006 respectively.

A month wise IPO trend shows, the year started on a bullish note and in the month of February 2008 there was maximum activity in this segment but the second part of the year saw a steep decline due to economic downturn, Grant Thornton said. The period between July and December 2008, contributed only 10 per cent to the total IPO value of 2008.

A sectoral analysis shows that power and energy topped the list of sectors for 2008 with 74 per cent of total capital raised, followed by real estate and infrastructure management with 9 per cent.

In terms of the number of IPOs power & energy and real estate & infrastructure Management led with five IPOs each.

The slackness in the primary market was due to the poor response to the post-IPO listings in the secondary market and the slump in the investors sentiments due to overall sluggish market conditions, market observers said.

Meanwhile, according to primary market tracking firm Prime, 37 companies which were planning to garner about Rs 29,164 crore through IPOs had deferred their plans to enter the market in 2008 due adverse market conditions.

source: Economictimes

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