The primary markets have all but eclipsed the stunning rally in the secondary markets in 2020 with companies having raised a whopping Rs 1.77 lakh crore. That’s a 116% increase over last year’s Rs 82,241 crore and topped the Rs 1.6 lakh crore raised in 2017, data from Prime Database show.
Moreover, the average listing gains from the top 15 IPOs (initial public offerings) have been a rewarding 35.5%, way above the 22.3% that investors got in 2017.
In all, companies mopped up Rs 26,611 crore through IPOs, 115% more than the Rs 12,362 crore that companies had raised in 2019 but smaller than the Rs 33,246 crore raised in 2018.
PEs and VCs cashed in on the good sentiment and were able to sell equity worth Rs 8,026 crore.
As Pranav Haldea, managing director, Prime Database, pointed out, the increased global liquidity created by the accommodative stance of central banks, low interest rates and positive outlook on emerging markets like India had facilitated the large fund-raising.
“The good quality paper at attractive valuations has also resulted in the record fund-raising,” Haldea said.
Siddhartha Khemka,head (retail research), Motilal Oswal Financial Services, observed that with larger companies being fairly valued and strong liquidity in the market, investors have shown an interest in mid-cap and small-cap stocks.
“The appetite for newer securities has also increased and several companies have tapped the markets to raise capital at a good valuation,” Khemka said.
Typically, the sentiment in the primary markets has been buoyed by a bull rally and increased liquidity, helping businesses to command a better valuation for their businesses.
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