Fund-raising via IPOs at record Rs 1.19 trn in 2021, says report

IPOs from new-age tech start-ups, strong retail participation, and huge listing gains were the key drivers that fuelled the IPO boom

Sixty-three companies raised Rs 1.19 trillion through initial public offerings (IPOs) in calendar year 2021 — a record for any year.

This is nearly 4.5x the Rs 26,613 crore raised through 15 IPOs in 2020 and almost double the previous best of Rs 68,827 crore raised in 2017, according to PRIME Database. 

Overall, public equity fundraising —  that includes qualified institutional placements, follow-on offerings, as well as infrastructure investment trusts/real estate investment trusts — stood at Rs 2.02 trillion — higher than the previous high of Rs 1.76 trillion in the preceding year.

“IPOs from new-age loss-making technology (tech) start-ups, strong retail participation, and huge listing gains were the key drivers that fuelled the IPO boom this year,” said Pranav Haldea, managing director, PRIME Database — a primary market tracker. 

The average deal size for IPOs was Rs 1,884 crore. The largest IPO was from One97 Communications (Paytm) for Rs 18,300 crore — the largest offering historically. 

Of the 59 IPOs for which the data is available, 36 IPOs received mega responses of more than 10x (of which, six IPOs more than 100x), while eight IPOs were oversubscribed more than 3x. The balance 15 IPOs were oversubscribed between 1x and 3x.

Prashant Singhal, emerging markets, tech, media, and telecom (TMT) leader, EY, said, “This year has seen some of the best performances in the Indian IPO market, with new-age tech companies leading the way and good traction also seen in diversified and industrial products, consumer products and retail sectors. Investor sentiment remains upbeat as 2021 comes to a close, with strong domestic and global demand and significant momentum going into 2022.”

The year witnessed incredible response from retail investors as well. The average number of applications from retail was 1.43 million, in comparison to 1.27 million in 2020 and 405,000 in 2019. The highest number of applications from retail in 2021 was received by Glenmark Life Sciences (3.39 million), followed by Devyani International (3.26 million) and Latent View (3.18 million).

The volume of shares applied for by retail was 135 per cent of the IPO mobilisation, compared with 156 per cent in 2020. However, the total allocation to retail was Rs 24,292 crore, which was just 20 per cent of the total IPO mobilisation (down from 32 per cent in 2020).

According to Haldea, the success of IPOs was further buoyed by strong listing performance. Of the 58 IPOs which have got listed so far, 34 gave a return of over 10 per cent, based on closing price on listing date.

Sigachi Industries gave the most returns of 270 per cent on debut, followed by Paras Defence & Space Technologies (185 per cent) and Latent View (148 per cent).

Forty of the 58 IPOs are trading above the issue price (closing price of December 22). The average listing gain was 32 per cent, in comparison to 44 per cent in 2020 and 19 per cent in 2019.

Twenty-five of the 63 IPOs that hit the market had a prior private equity (PE)/venture capital (VC) investment. Offers for sale (OFS) by such PE/VC investors at Rs 24,106 crore accounted for 20 per cent of the total IPO amount. OFS by promoters at Rs 31,704 crore accounted for a further 27 per cent of the IPO amount. The amount of fresh capital raised in IPOs in 2021 stood at Rs 43,324 crore, which is more than the last eight years combined.  

Anchor investors collectively subscribed to 39 per cent of the total public issue amount. Foreign portfolio investors played a dominant role as anchor investors, with their subscription amounting to 24 per cent of the amount, followed by mutual funds at 11 per cent.

Qualified institutional buyers (including anchor investors) subscribed to 69 per cent of the total public issue amount.

This year also saw a record number of filings with the markets regulator, with 115 filings, compared with 50 in 2019 and 2020 put together.