BOMBAY, 30 August 2004 — The timing is just perfect. Riding on the back of the tremendous success of the Initial Public Offering (IPO) of Tata Consultancy Services (TCS), the Indian IPO market seems to be once again set for some boom time. The technology company’s issue was oversubscribed 7.7 times and that too for an issue which aimed at collecting Rs.50 billion.

Close to Rs.90 billion has been raised through two large issues of ICICI Bank in April and TCS. The financial year 2003-04 saw Rs.178. 21 billion being raised through new issues, of which Rs.151.28 billion was through seven PSU divestments.

Now that it is known that the IPO market has the ability to absorb an issue of any size, provided it is from a fundamentally sound company, there are many companies waiting in the wings to come out with their issues.

Major issues are expected to come from the manufacturing, retailing and the financial services sector. There is news that over Rs.100 billion is expected to be raised over the next few months from the IPO markets. The companies include NTPC, which is planning a float of about Rs.50 billion, retail shopping outlet — Shoppers’ Stop, Bangalore-based Sasken Technologies, broking firm Indiabulls and the Indian arm of Hutchison Whampoa. Chiefs of many investment banking organizations are busy convincing industry leaders to go for the IPO route.

Telecom firms like the Indian arm of Hong Kong-based Hutch, Tata Teleservices (Maharashtra) and BPL are also likely to go public, according to Prithvi Haldea of New Delhi-based Prime Database, though these issues may not raise more than Rs.8 billion to Rs.10 billion per offer.

Fund managers concur that the Indian IPO market now has the depth and the huge appetite for new issues. There is hope that this fiscal, 2004-05, will also see resource mobilization equal, if not exceed that of 2003-04. In order to achieve this, the IPO market will have to depend heavily on the government achieving its divestment target of Rs.50 billion during the second half of the year. Also it is imperative that the secondary market remains strong for the IPOs to succeed.

Hutch, which would be the second private telecom operator to go for an IPO, is expected to mop up between Rs.12 billion to Rs.15 billion.

Indiabulls Financial Services will hit the market with a public issue of 27.1 million shares at a price band of Rs.16-19 with a face of Rs.2 per share, aggregating between Rs.435 million and Rs.520 million.

The issue, through a 100 percent book building route, opens on Sept. 6 and closes on Sept. 10.

There is also news that the Mahindra group is planning to float its financial services arm, Mahindra & Mahindra Financial Services (MMFSL) to raise funds for business expansion.

An IPO is also in the offing from Jaiprakash Hydropower which is expected to raise up to Rs.3.8 billion. It will file the prospectus with SEBI next month and the issue is likely to be priced in the range of Rs.15 to Rs.20 per share.

Shoppers’ Stop intends to kick-start its IPO in the next 6-8 weeks. It proposes to issue 69.46 lakh equity shares of Rs. 10 each through the book-building route.

Apart from all these IPOs, there is some good news for the Non-Resident Indians (NRIs) too. SEBI has finally recognized the troubles the NRIs go through to not just apply for an IPO in India but face major trouble when getting the refunds. To correct this, SEBI has set up the Securities Markets Infrastructure Leveraging Expert (SMILE) task force after the allotment fiasco during the recent PSU public issues, most notably the ONGC issue.

The task force report says that real time gross settlement (RTGS) gets extended to retail transactions, it is feasible for all refunds to be credited directly into NRI bank accounts in India through RTGS. The task force said better facilities should be given to NRIs investing in domestic IPOs.

Well, looks like good times are heralded for the Indian IPO markets and if the problems of the NRIs are indeed taken care of, then it could be a very good year for the NRIs, too.