Govt Divestment to Boost FY26 Fundraising: Emkay

New Delhi, Mar 20 (PTI) The government's divestment plan is likely to provide a push to fundraising in FY26 as the recent market correction has slowed down deal-making activity, Emkay Global Financial Services said on Thursday.

Addressing a webinar on the state of affairs of the Indian investment banking industry, Yatin Singh, CEO of investment banking at Emkay Global Financial Services, said the public sector is turning out to be material client for investment banks in India with the Department of Investment and Public Asset Management (DIPAM) setting a divestment target of Rs 47,000 crore for FY26.

"This is a huge opportunity for investment banks in FY26 and beyond," he said.

Over the past three years, the initial public offers (IPOs) of LIC, IREDA, and the offer for sale (OFS) of ONGC, IRCTC, HAL, Coal India, RVNL, NHPC, Hudco, Ircon, and Cochin Shipyard have kept the deal street buzzing within the PSU segment.

Looking ahead, the upcoming IPOs of Bharat Coking Coal, Central Mine Planning and Design Institute (CMPDI), Maharashtra Natural Gas Ltd (MNGL), along with the QIP/OFS of IREDA, Garden Reach Shipbuilders and Engineers (GRSE), Veedol, Central Bank, UCO Bank, IOB, Bank of Maharashtra, and Punjab & Sind Bank are expected to present significant opportunities for the investment banking industry in FY26 and beyond, Singh added.

The steep correction in the equity market has started showing its impact on fundraising activities. This slowdown in IPO activity is reflected in the numbers, as only five companies went public in January and four in February, compared to 15 public issues in January-February 2024.

In addition, fundraising through qualified institutional placements (QIPs) was limited to only 7 in January-March 2025 as compared to 18 in the year-ago period.

This shift followed a remarkable 2024, in which 92 maiden public issues collectively raised over Rs 1.6 lakh crore, along with companies raised over Rs 1.36 lakh crore through 91 QIPs. This was driven by robust retail participation, a resilient economy, and booming private capital expenditure.

The broader market Sensex has fallen around 3 per cent so far this year due to a combination of domestic and global factors. The Foreign Portfolio Investors (FPIs) withdrew Rs 1.46 lakh crore from the Indian equities in 2025 so far.

The resilient Systematic Investment Plan (SIP) inflows are supporting markets to a large extent as monthly contribution through the route has been over Rs 20,000 crore for the past 11 months (April 2024-February 2025). Moreover, the SIP flows have risen to over Rs 25,000 crore for the past five months which is quite an encouraging sign, despite negative returns from the market since September 2024.

"The street was expecting a slowdown and fall in SIP flows, which is quite normal in a falling market. A fall in SIP going forward could have a severe impact on overall market performance," Singh said.

Singh said key decisions by the Reserve Bank of India (RBI) to boost lending are expected to trigger liquidity in the markets in the near to medium term.

The bank credit is expected to get a strong boost in the medium to long term due to repo rate cut, relaxation of risk weights for Scheduled Commercial Banks (SCBs) on NBFC loans by 25 per cent, liquidity measures undertaken by the RBI and measures announced in the Union Budget to boost consumption demand, he added.