The primary market witnessed a bumper crop of new public issues, comprising both initial public offers (IPOs) and follow-on public offers (FPOs) in 2010. The total mobilisation at Rs.69,132 crore was the highest ever in the history of the primary market. According to Prime Database, one of India's oldest and most reliable purveyors of capital market data, the mobilisation in 2010 was three-and-a half times the 2009 figure of Rs.19,567 crore and 53 per cent more than the Rs.45,142 crore mobilised in 1997, the previous record-breaking year. Impressive as the buoyancy in the primary market has been, it is worth noting that the surge in the number and quantum of new public issues came after a lacklustre performance in 2008 and 2009. Secondly, it was possible almost entirely because of a sharp acceleration in the public sector disinvestment programme. Government-owned institutions mobilised Rs.49,007 crore — more than 70 per cent of the year's total — through three IPOs and six follow-on public offers (FPOs). In contrast, in 2009, there were only two IPOs from the public sector companies. The implication is that the United Progressive Alliance government has had a greater success in cobbling together a coherent disinvestment programme that was able to overcome much of the opposition. However, there have been some discordant notes. Some employees of Coal India heeding their trade union call did not take up their entitlements and lost out on the gains from the undertaking's maiden offer, by far the biggest IPO from India. .
Obviously, the higher valuations in the secondary market during 2010 have boosted the primary market sentiment. Of the 72 share offers in the year, 64 were IPOs and eight FPOs. The number of FPOs has been declining over the years probably because they involve a further reduction in the government's stake in public sector enterprises. Besides, most of the successful public offers in recent times have been by cash-rich government companies that are under fewer compulsions to tap the capital market at frequent intervals. Another interesting feature is the preponderance of large-sized public issues. There were as many as 13 issues of over Rs.1,000 crore and only nine issues of less than Rs.50 crore. The large average size of the public offer reinforces the point that the new issues market has not been able to accommodate small and medium enterprises. Hence the quest for a separate, dedicated exchange for them will continue.
