 "IPO")
Fifty seven Indian corporates raised Rs 49,434 crore through main board initial public offerings (IPOs) in 2023, 17 per cent lower than the Rs 59,302 crore mobilized by 40 IPOs in 2022, according to primedatabase.com, a company that provides database on the primary capital market. However, excluding the mega LIC IPO which came out in 2022, IPO mobilisation increased by 28 per cent from last year.
Overall public equity fundraising increased by 59 per cent to Rs 1,44,283 crore in 2023 from Rs 90,886 crore in 2022/
Largest IPOs:
The largest IPO in the 2023 was from Mankind Pharma (Rs 4,326 crore). This was followed by Tata Technologies (Rs3,043 crore) and JSW Infrastructure (Rs 2,800 crore).
Smallest IPOs:
At the other end, the smallest IPO was from Udayshivakumar Infra raising just Rs 66 crore followed by Plaza Wires (Rs 71 crore). The average deal size reduced significantly to Rs 867 crore in comparison to Rs 1,483 crore in 2022 and Rs 1,884 crore in 2021.
More From This Section
As many as 40 out of the 57 IPOs came in just four months of the year (September: 14, December: 11, November: 8 and August: 7).
"While we saw companies from multiple sectors tapping the IPO market in 2023, one key sector which had a limited presence was BFSI with just Rs 6,190 crore (or 13 per cent) being raised by companies from this sector (in comparison to 46 per cent in 2022). New age Technology Companies (NATC) too were few at just 2 (Yatra and Mamaearth)," said Pranav Haldea, Managing Director, PRIME Database Group.
The overall response from the public appears excellent. Of the 57 IPOs, 41 IPOs received a mega response of more than 10 times (of which 16 IPOs more than 50 times) while 9 IPOs were oversubscribed by more than 3 times. The balance 7 IPOs were oversubscribed between 1 to 3 times.
In comparison to 2022, the response of retail investors also increased tremendously. The average number of applications from retail increased to 13.21 lakh, in comparison to 5.66 lakh in 2022. The highest number of applications from retail were received by Tata Technologies (52.11 lakh) followed by DOMS Industries (41.30 lakh) and INOX India (37.34 lakh).
The number of shares applied for by retail by value (Rs 1,49,988 crore) was 203 per cent higher than the total IPO mobilisation (in comparison to being 22 per cent lower in 2022), again showing a much higher level of enthusiasm from retail during the period. The total allocation to retail, however, was Rs 13,749 crore which was 28 per cent of the total IPO mobilisation (slightly down from 29 per cent in 2022).
IPO response was further buoyed by strong listing performance.
Average listing gain (based on closing price on listing date) increased to 29 per cent, in comparison to 11 per cent in 2022.
Of the 57 IPOs, 40 gave a return of over 10 per cent. Tata Technologies gave a stupendous return of 163 per cent followed Ideaforge (93 per cent) and Utkarsh Small Finance Bank (92 per cent). 53 of the 57 IPOs are trading above the issue price (closing price of 1st January, 2024) with an average return of 46 per cent.
At least 21 out of the 57 IPOs that hit the market had a prior PE/VC investor who sold shares in the IPO.
Offers for sale by such PE/VC investors at Rs 10,968 crore accounted for 22 per cent of the total IPO amount. Offers for sale by private promoters at Rs 15,196 crore accounted for another 31 per cent of the IPO amount. On the other hand, the amount of fresh capital raised in IPOs in 2023 was Rs 20,662 crore or 42 per cent of the total amount, the highest (in terms of per cent share) in seven years.
Thirty four per cent of the amount raised through fresh capital was for Capital Enhancement/Working Capital followed by Retirement of Debt (22 per cent), Expansion/New Project/Plant & Machinery (15 per cent), General Corporate Purpose (11 per cent) and Issue Expenses (9 per cent).
Anchor investors collectively subscribed to 34 per cent of the total public issue amount.
Domestic Mutual Funds played a slightly more dominant role than FPIs as anchor investors with their subscription amounting to 14 per cent of the issue amount with FPIs at 13 percent.
Qualified Institutional Buyers (including Anchors Investors) as a whole subscribed to 57 per cent of the total public issue amount. FPIs, on an overall basis, as anchors and QIB, subscribed to 23 per cent of the issue amount, more than Mutual Funds at 17 per cent.
2023 saw 87 companies filing their offer document with Sebi for approval (in comparison to 89 in 2022). On the other hand, 2023 also saw 40 companies looking to raise nearly Rs 70,000 crore letting their approval lapse, 3 companies looking to raise Rs 3,550 crore withdrawing their offer document and Sebi returning the offer document of a further six companies looking to raise Rs 10,800 crore.
Outlook for 2024
The pipeline continues to remain strong. Twenty-seven companies proposing to raise Rs 28,500 crore are currently holding Sebi's approval while another 36 companies looking to raise about Rs 40,500 crore are awaiting the regulator's approval. (Out of these 63 companies, 3 are NATCs which are looking to raise roughly Rs 16,000 crore).
Haldea believes the next couple of months should see several IPOs being launched before a pause on account of the general elections.
