IPOs, FPOs, rights issue raise Rs 1 lakh cr in FY21; what’s in store for this year?

• Follow

Indian companies managed to raise over Rs 1 lakh crore from investors through public and rights issue in FY21 despite disruptions caused by the Covid-19 pandemic. Data released by Ministry of Finance shows companies raised Rs 46,029.71 crore from 56 issues through IPO and follow on public offers (FPO), up 115%, against Rs 21,382 crore in FY20.

On the other hand, capital raised by India Inc through rights issue last fiscal stood 15% higher than the previous year which was at Rs 55,669.79 crore. In total, the domestic firms garnered Rs 1.10 lakh crore through IPO, FPO and rights issue last fiscal, up 42.87% against Rs 77,052.14 crore in FY20.

Under the follow-on public offerings, the company offer additional shares of an already listed company to the general public. On the other hand, the rights issue means offering additional shares of an already listed company but the offer is made to only existing shareholders of the company.

Overall, robust retail participation in IPOs and huge listing gains were among the major highlights of the previous financial year. Commenting on the primary markets, Rusmik Oza, Executive Vice President, Head of Fundamental Research, Kotak Securities said, “There is ample liquidity in the system and at investors end. We expect demand for IPOs to continue in FY22 also.”

On the other hand, Gaurav Dua, SVP, Head-Capital Market Strategy, Sharekhan by BNP Paribas said, “In FY2022, there are expectations of a slew of offerings from technology-based digital businesses. Retail equity investor would get an opportunity to invest in companies like Zamato, Policybazaar, Flipkart, PayTM etc which were earlier available only to select investors in the non-listed space. This could be an exciting journey for retail investors and they need to be careful as some of these businesses are not profitable.”