IPO fundraising in India Falls by Half in 2022-23, But 3rd Highest Ever

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37 Indian companies have raised Rs 52,116 crore through main board Initial Public Offerings (IPOs) in the financial year 2022-23, a report showed. The amount is less than half the all-time high of Rs 1,11,547 crore raised by 53 IPOs in 2021-22.

Pranav Haldea, managing director of PRIME Database, a research firm focused on India’s junior capital markets, added that LICs alone contributed Rs 20,557 crore or 39% of the total raised in 2022-23. Without the LIC, the IPO would have raised only Rs 31,559 crore. Still, 2022-23 will be the third-highest on record regarding IPO funding.

The report added that India’s overall public equity funding would also fall by 56% to Rs 76,076 crore in 2022-23 from Rs 1,73,728 crore in 2021-22.

The largest IPO in 2022-23 and India’s largest ever IPO is from Indian Life Insurance, followed by Delhivery (Rs 5,235 crore) and Global Health (Rs 2,206 crore), with an average deal size of Rs 1,409 crore.

25 of the 37 IPOs were launched in just three months of the year (May, November and December), which, according to Haldea, indicates that “a volatile market environment for much of the year is not conducive to IPOs. Activity”.

The report further noted that IPO fundraising in the final quarter of 2022-23 was the lowest in the past nine years.

Only two of the 37 IPOs (Delhivery and Tracxn) were from New Age Technology Companies (NATC), while five NATC IPOs in 2021-22 raised Rs 41,733 crore, pointing to a slowdown in IPO activity in the sector.

The report shows retail investors responded less enthusiastically than in the previous fiscal year. The average number of applications from retail investors fell from 13.32 lakh in 2021-22 and 12.73 lahks in 2020-21 to just 564,000.

Haldea noted that the modest listing performance has further dampened the response to IPOs. Calculated based on the closing price on the day of listing, the average listing return has dropped to 9.74%, a sharp drop from 32.59% in 2021-22 and 35.68% in 2020-21.

Of the 36 IPOs that have gone public so far, only 16 have returned more than 10%, with DCX Systems leading the way with a return of 49%, followed by Harsha Engineers (47%) and Electronics Mart (43%).

As of the close on March 24, 2023, 21 of the 36 IPOs are currently trading above their issue price.

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