The coronavirus pandemic dealt a blow to the Union government’s plan to raise funds through major stake sales and initial public offerings.
The government managed to raise just ₹42,871.94 crore so far this year, down 37% from the ₹68,176.57 crore it had raised in 2019, according to Prime Database, a data provider on capital markets.
Divestments this year were led mostly by exchange traded funds (ETFs). During the year, ETFs at ₹16,500 crore with a 39% share were the most-used mode, followed by central public sector enterprises (CPSEs) sale at ₹13,883 crore (32%), public offerings at ₹10,988 crore (26%), buybacks at ₹844 crore and remittances from Specified Undertaking of The Unit Trust of India at ₹600 crore (1%).
Meanwhile, domestic companies managed to raise record amounts of capital this year, defying disruptions caused by the pandemic and economic contraction. Fundraising through public equity markets hit a record ₹1.7 trillion in 2020, surpassing the previous high of ₹1.6 trillion in 2017, according to Prime Database.
Capital raised by India Inc. this year was more than double of last year’s ₹82,241 crore and ₹62,651 crore in 2018.
“Strong retail participation in initial public offerings (IPOs), huge listing gains and highest-ever amount raised through qualified institutional placements (QIPs) and infrastructure investment trust (InvITs)/ real estate investment trusts (ReITs) were the key highlights of the year,” said Pranav Haldea, managing director, Prime Database Group.
In the primary markets, there were 15 IPOs, which collectively raised ₹26,611 crore, more than double of the ₹12,362 crore raised through 16 IPOs in 2019. SBI Cards’ ₹10,341 crore share sale was the biggest IPO of 2020. The average deal size was ₹1,774 crore.
Haldea said investor response to IPOs was further buoyed by strong listings of IPOs during the year.
Of the 14 IPOs which got listed, 10 offered a return of over 10% (based on the closing price on listing date). Burger King jumped 131%, followed by Happiest Minds Technologies (123%), Mrs Bectors Food Specialities (107%), Route Mobile (86%), Rossari Biotech (75%), Chemcon Speciality Chemicals (72%), Gland Pharma (21%, Mazagon Dock (19%), Computer Age Management Services (14%) and Likhitha Infrastructure (14%).
However, activity in the SME IPO segment declined. There were only 27 SME IPOs during the year, which raised a total of ₹159 crore. This marked a sharp decline from 51 IPOs in 2019 totalling ₹624 crore.
Mobilization of resources through rights issues was also at a record high, mostly led by the mega ₹53,124 crore rights issue of Reliance Industries Ltd.
According to Prime Database, ₹64,984 crore was raised through rights issues this year, up 25% from ₹52,053 crore in 2019. There were 20 companies which tapped rights issues this year, rising from 12 companies in 2019.
Meanwhile, 26 companies mobilized ₹84,501 crore through QIPs, a record for a calendar year. This was more than double of the ₹35,238 crore raised last year. ICICI Bank made the biggest QIP, raising ₹15,000 crore, accounting for 19% the total QIP amount.