Is access to primary markets still assymetric in India?

Abstract

India’s capital markets were liberalised 30 years ago, along with economic liberalisation. Did the opening up of the primary capital markets improve firms’ access to capital? If it did, then is the access uniform across firms? If not, what have been the characteristics of firms that have benefitted disproportionately in terms of access to capital consequent upon liberalization of primary markets. As the primary capital markets mature in India, in terms of market characteristics and regulation, over the last three decades, how has it changed the access to capital for Indian businesses overtime. In particular, which are the sectors that have witnessed maximum primary issuances? We answer these questions using emperical evidence from companies that chose to go public in India in the last three decades. There is evidence of predominance of non-financial companies that go for an Initial Public Offering (IPO). Further, of the 152 industry groups analysed, there is a high degree of concentration of companies that went public. The top 3% of the industry groups (5 in number) accounted for 36% of all IPO firms. The top 6% and 9% (numbering 10 and 15 groups) accounted for 45% and 52% of all firms going public. In terms of type of issuances, Indian firms prefer to raise capital from the primary markets via private placements rather than public offerings.