Fund Collection Through IPOs, FPOs Hits New 5-Year Low

IndiaFollowing the poor show by public offers and low-investor sentiment in the stock market, various companies in country raised just Rs 16,927 crores through initial public offers (IPOs) and follow-on public offers (FPOs).

It represents 63% decline in fund collection as compared to Rs 45,137 crore collected last year according to the report of research firm, Prime Database. Many companies have dropped idea to raise funds through public offer due to poor response from investors.

While commenting on the development, ICICI Securities senior vice-president, Ravi Sardana said, "The year began with an impressive line-up of offerings. But the global meltdown triggered a market collapse and sentiment reached such a low that there was no investor interest at any price."

The largest ever IPO in India, Reliance Power did well in 2008 and raised Rs 10,123 crore. Its IPO accounted for 60% of total funds raised in the reporting year. There were only two issues of over Rs 1,000 crore in current year as compared to six in 2007. Total of 38 public equity issues were floated in current fiscal as compared to 106 in the previous year.

CMD of Prime Database, Prithvi Haldea, stated, "Unlike the preceding year, which had seen the real estate sector cornering 33% of the total mobilisation, this sector had only a 7% share in 2008. Power sector dominated 2008, which through two issues, cornered 65% share of the total fund raised. Among other sectors, banking had a 10% share raising Rs 1,639 crore."

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