IPO fundraising drops by 17% in 2023, 40 companies achieved more than 10% return on stock exchange listing

Fifty-seven Indian companies raised Rs 49,434 crore through motherboard initial public offerings (IPOs) in 2023, down 17 percent from the Rs 59,302 crore mobilized by 40 IPOs in 2022, according to primedatabase.com, a company that provides databases on top IPOs. capital market. However, if we exclude the 2022 mega LIC IPO, IPO mobilization is up 28 percent over last year.

Total public fundraising rose 59 percent to Rs 1,44,283 crore in 2023 from Rs 90,886 crore in 2022/

Largest IPOs:

The largest IPO in 2023 was of Mankind Pharma (Rs 4,326 crore). This was followed by Tata Technologies (Rs3,043 crore) and JSW Infrastructure (Rs 2,800 crore).

Smallest IPOs:

On the other hand, the smallest IPO came from Udayshivakumar Infra, which raised just Rs 66 crore, followed by Plaza Wires (Rs 71 crore). The average deal size dropped significantly to Rs 867 crore compared to Rs 1,483 crore in 2022 and Rs 1,884 crore in 2021.

As many as 40 of the 57 IPOs took place in just four months of the year (September: September 14, December: 11, November: 8 and August: 7).

“While we saw companies from multiple sectors tapping the IPO market in 2023, BFSI was a key sector that had a limited presence, with only Rs 6,190 crore (or 13 percent) raised by companies from this sector (compared to 46 percent Also New Age Technology Companies (NATC) were small at just 2 (Yatra and Mamaearth),” says Pranav Haldea, Managing Director, PRIME Database Group.

The general response from the public seems excellent. Of the 57 IPOs, 41 IPOs received a mega response of more than 10 times (of which 16 IPOs received more than 50 times), while 9 IPOs were more than 3 times oversubscribed. The balance of the 7 IPOs was oversubscribed by 1 to 3 times.

Compared to 2022, the response from private investors has also increased enormously. The average number of retail applications increased to 13.21 lakh, compared to 5.66 lakh in 2022. The highest number of retail applications 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 requested by retail by value (Rs 1,49,988 crore) was 203 per cent higher than the total IPO mobilization (compared to 22 per cent lower in 2022), again showing much higher enthusiasm among the retail sector. during the period. However, the total retail allocation was Rs 13,749 crore, which was 28 per cent of the total IPO mobilization (just under 29 per cent in 2022).

The response to the IPO was further supported by strong listing performance.

The average listing profit (based on the closing price on the listing date) increased to 29 percent, compared to 11 percent in 2022.

Of the 57 IPOs, 40 delivered a return of more than 10 percent. Tata Technologies achieved an astonishing return of 163 percent, followed by Ideaforge (93 percent) and Utkarsh Small Finance Bank (92 percent). 53 of the 57 IPOs are trading above the issue price (closing price on January 1, 2024), with an average return of 46 percent.

At least 21 of the 57 IPOs that came to market had a prior PE/VC investor selling shares during 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 percent 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 percentage share) in seven years.

Thirty-four percent of the amount raised from new capital was for capital raising/working capital, followed by debt repayment (22 percent), expansion/new project/plant and machinery (15 percent), general corporate purposes (11 percent). ) and issuance costs (9 percent).

Anchor investors collectively subscribed to 34 percent of the total amount of public issues.

Domestic mutual funds played a slightly more dominant role than FPIs as anchor investors, with their subscription accounting for 14 percent of the issue amount, while FPIs stood at 13 percent.

Qualified institutional buyers (including anchor investors) as a whole subscribed to 57 percent of the total amount of public issues. FPIs on the whole, as anchor and QIB, subscribed to 23 percent of the issue amount, more than mutual funds at 17 percent.

In 2023, 87 companies submitted their offer documents to Sebi for approval (compared to 89 in 2022). On the other hand, 2023 also saw 40 companies seeking to raise nearly Rs 70,000 crore lapse in approval, three companies seeking to raise Rs 3,550 crore withdrew their offer document and Sebi returned the offer document of another six companies seeking Rs 10,800 to retrieve. crore.

Outlook for 2024

The pipeline remains strong. Twenty-seven companies proposing to raise Rs 28,500 crore currently have Sebi's approval, while another 36 companies seeking to raise around Rs 40,500 crore are awaiting regulatory approval. (Of these 63 companies, 3 are NATCs looking to raise around Rs 16,000 crore).

Haldea believes there will be several IPOs in the coming months before a pause due to the general election.

First print: January 3, 2024 | 12:32 pm IST