Welcome

Recent Trends In Primary Market

What is Primary Market?

The first opportunity that investors have to buy a newly issued security. After the first purchases, subsequent trading is in the secondary market.

Recent trends in Primary Market……

Raising of Capital

The fresh capital raised through new issue markets has enhanced from decade to decade. The primary market has become an important source of mobilizing fund for Indian issuers since the commencement of the economic reformed process in 1991-92

There is a preference for raising resources in the primary market through private placements of debt instruments. Private placements accounted for about 91% of total resources mobilized through domestic resources issues by the corporate sector during 2000-01.

During 2015-16, 108 companies accessed the primary market and raised ` 58,166 crore through 95 public and 13 rights issues, as against 88 companies which raised ` 19,202 crore in 2014-15 through public (70) and rights issues (18)

Resource mobilization through Primary MarketParticulars 2014-15 2015-16 % share in total

amount

No. of Issues

Amount(Cr)

No. of Issues

Amount(Cr) 2014-15 2015-16

Public Issue 70 12,452 95 48,927 64.8 84.1

Right Issue 18 6,750 13 9,239 35.2 15.9Total 88 19,202 108 58,166 100 100

Sector wise resource mobilization in primary market

Source; SEBI

The public sector organizations like financial institutions, PSUs have started dominating in the primary market. The increase in the amount mobilized was on account of higher level of capital mobilization by banks and financial institutions. The public sector mobilized funds primarily in the form of Bonds. Banks and financial institutions were primarily responsible for the trend.

Dominations

Large issues in 2015-16

SL.NO Name of the Entity Size of Issue(In Cr)

% of total Issue in the year

1 National Highway Authority of India-Tranche1

10000 18.1

2 TATA Motors 6779 12.33 Indian Railway Financial

Corporation Ltd4532 8.2

4 NABARD 3500 6.45 National Highway Authority

of India- Tranche23000 6

Source; SEBI

Largest IPOs in India

SL.No

Name of the Entity

Date Amount(Cr)

1 COAL India Nov 4 2010 15,199.442 Reliance Power Feb 11

200811,700

3 ONGC Apr 2 2004 10, 694.504 DLF Jul 5 2007 9,187.505 Reliance Petroleum

(Merged)May 11 2006

8,100

Factors which have accelerated the growth of Primary Market Investment Industrial Growth

The industrial growth and exhausting production capacities in the industry has necessitated further expansion of industrial capacities. It induced the companies to mobilize resources for further investment in future. Buoyancy of the secondary market

Buoyancy of the secondary market led all-round rise in prices of shares. This factor induced the investors put higher amount of their savings in investment in the primary market` Fiscal incentives

The fiscal incentives given to investors in schemes of mutual funds and reduction in capital gain tax attracted investors in the primary market Tightening of norms

On-going process of improving the quality of issues and tightening of norms relating to merchant bankers and credit rate agencies probably created more confidence among investors.

Initiatives taken by SEBI for the development of Primary Market Electronic-IPO

The e-IPO norms are aimed at reducing the time taken between share sale and listing to 6 days from past 12 days, enhance the reach of retail investors and reduce costs for issuers. The e-IPO norms are started on 1 January 2016.

Favorable norms for listing of start-ups and SMEsSEBI recently introduced the listing norms for start-

ups aimed at encouraging Indian entrepreneurs to remain within the country, rather than moving to overseas markets for raising capital. SEBI has already made it easier for the SMEs to raise money from capital market.

Strengthening the Continuous Disclosure Requirements for Listed Entities

It ensures timely disclosure of the information by the listed companies on the request of SEBI and investors.

Introduction of System-Driven Disclosures .SEBI has taken a major initiative for easing the compliance

burden of disclosures to be made by individuals and companies . Restrictions on Willful Defaulters from Raising Funds, Taking Over

Companies and Becoming Market Intermediaries . Exit Opportunity to Shareholders in Case of Change in Objects by

Issuers as per Companies Act 2013.