Dalal Street may soon become an abode for Rs 100 trillion worth of wealth by the virtue of India Inc’s capital raising spree from public issues alone, and without much support from the secondary market.
The underlying public issues are currently estimated at around Rs 2,00,000 crore, which includes mostly big-ticket initial public offerings (IPOs).

This would take the total wealth invested on bourse, measured in terms of cumulative market capitalisation of all the listed companies in India, to close to Rs 100,00,000 crore, from more than Rs 75,00,000 currently.
“The (public issue) pipeline is presently Rs 1,90,000 crore strong,” primary market tracking firm Prime Database’s Prithvi Haldea said, while adding that a strong issuer pipeline is well accompanied by huge investors’ appetite. However, the success of IPOs depend considerably on the secondary market conditions, the experts believe. “Secondary market needs to remain stable, if not buoyant, and scam-free. The present conditions continue to offer an excellent opportunity to channelise household savings into the economy through the capital market,” Haldea said.

Positive outlook

According to Prime Database says, capital mobilisation would be over Rs 35,000 crore from 70 public issues alone, for which documents have already been filed with market regulator Sebi, while the year 2008 could see close to Rs 75,000 crore being raised collectively through all public issues plan underway.

Anil Ambani Group’s Reliance Power is the first major IPO to hit the bourse and the four-day bidding process would begin on January 15. It is looking to raise close to Rs 11,700 crore and the company’s market cap is estimated at around Rs 1,00,000 crore even if it lists at the lower end of the price band of Rs 405-450 a share in first week of February.

The rally would be dominated by power, real estate and financial services, Haldea said, adding that a buoyant secondary market and handsome post-listing gains on almost all IPOs are making the IPO space attractive.
It further suggests, there are 150-175 public issues already lined up for 2008 eyeing estimated proceeds of Rs 75,000 crore, including about Rs 60,000 crore through IPOs and about Rs 15,000 crore through FPOs. Besides, market anticipates further 50-75 issues to come up as the year progresses. Reliance Power, touted the biggest ever IPO, would be followed by a host of other IPOs in the power sector. Key among these would be offerings from REC, NHPC, Essar Power, JSW Energy and Sterlite Energy.