Powering the IPO-lineup of more than Rs 20,000 cr

NEW DELHI: So you thought the real estate sector mopped up the lion's share of the capital market this year? Just check these stats — blazing the trail this year is the power sector with an impressive IPO line-up of more than Rs 20,000 crore. This is around 35% more than the Rs 13,000- crore worth of IPOs mobilised in the real estate sector this year, including the mega DLF offering.

In fact, as many as seven companies, including Anil Dhirubhai Ambani's Reliance Power, have filed draft papers for IPOs with market regulator SEBI in the last couple of months. Already, funds worth Rs 3,900 crore from the capital market has come to the power sector this year. In addition, the sector is expected to raise over Rs 16,000 crore as companies such as Reliance Power, REC and NHPC line up to float their IPOs in the next couple of months.

Says Sanjeev Zarbage, assistant vice-president, research, Kotak Securities: "The power sector needs huge funds and that's why we are seeing a slew of companies wanting to tap the capital market. Since the economy is doing well, capital expansion is a natural way of catering to the services of the population.

Infrastructure has remained a major bottleneck in development for a long time. The power sector is expected to raise a lot of money from the markets in the next couple of years too. Apart from that, banking is another sector that will raise money through public issues to keep the credit growth going."

The action in the power sector is currently being fuelled by the growth in the services sector. "We are in the capacity building stage. The huge amount of money raised in the power sector will eventually support the other sectors to grow and, in turn, help the overall growth in the country.

Infrastructure is the other sector where we will see a lot of activity happening. Housing companies, commercial malls, airports and ports are the core infrastructure segments that will raise big amount of money from the markets. Power and infrastructure are the base of growth for any country," says Religare Enterprises COO Shachindra Nath.

The companies that have entered the capital market this year include Power Finance Corporation and PowerGrid Corp. Besides, there have been smaller issues from Suryachakra Power and Indowind Energy, which mopped up nearly Rs 135 crore collectively from their IPOs. The fund flow through capital market into the power sector was nearly Rs 1,300 crore in 2006 through IPOs of firms such as Lanco Infratech and GMR Infra.