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Indian firms mobilise $6b from public equity issues

"In fact, the year's equity mobilisation was the highest-ever in the history of Indian capital market," said Prithvi Haldea, managing director of equity market think tank PRIME Database that releases an annual study on the primary market.

Indian firms had mobilised Rs236.76 billion in 2005-06 and Rs214.32 billion in 2004-05, the think tank said. Prior to this, the highest amount raised by way of public issues in a year was Rs134.43 billion in 1994-95.

"The mobilisation in the year could have been higher but for the two secondary market crashes during the year that forced temporary shelving of initial public offerings (IPOs) as also lack of divestments of state-run enterprises."

According to PRIME, follow-on public offers by listed companies witnessed a huge decline and accounted for only 5 per cent of total mobilisation, even as the year saw the largest-ever equity IPO in India — Rs57.89 billion by Cairn India.

Significantly, the number of issues hitting the market recorded a decline during 2006-07 with 85 public issues, compared with 102 in the previous fiscal — a drop of over 17 per cent.

In terms of the method of offering, 71 out of 85 issues were book-building, and cornered 99 per cent of the total mobilisation, leaving only 1 per cent share for fixed-price issues.