Fundraising Via IPOs In April-September 2022: A total of 14 Indian companies raised Rs 35,456 crore through mainboard initial public offerings (IPOs) in the first half of 2022-23, which is 32 per cent lower than the Rs 51,979 crore raised through 25 IPOs in the corresponding period last year, according to data from PRIME Database. About Rs 20,557 crore, or 58 per cent of the amount, during April-September 2022 was raised just in the LIC IPO.
“Overall public equity fundraising also dropped 55 per cent to Rs 41,919 crore, from Rs 92,191 crore in the corresponding period of the previous year. The largest IPO in this period, which was also the largest Indian IPO ever, was from Life Insurance Corporation (LIC) for Rs 20,557 crore," PRIME Database Managing Director Pranav Haldea said.
LIC IPO was followed by Delhivery (Rs 5,235 crore) and Rainbow Children’s (Rs 1,581 crore). Only one out of the 14 IPOs (Delhivery) was from a new-age technology company (NATC) pointing towards the slowdown in IPOs from this sector. The average deal size was a high Rs 2,533 crore, Haldea added.
IPO Oversubscription This Year
He also said the overall response from the public was moderate. Of the 14 IPOs, four received a mega response of over 10 times (of which one IPO more than 50 times), while three IPOs were oversubscribed by more than three times. The balance of seven IPOs were oversubscribed between one to three times. The new HNI segment (Rs 2-Rs 10 lakh) saw an encouraging response with five IPOs receiving a response of more than 10 times.
Participation of Retail Investors, MFs, QIBs in IPOs
“In comparison to 2021-22, the response of retail investors also moderated. The average number of applications from retail dropped to 7.57 lakh, in comparison to 15.56 lakh in 2021-22 and 12.49 lakh in 2020-21. The highest number of applications from retail were received by LIC (32.76 lakhs) followed by Harsha Engineers (23.86 lakhs) and Campus Activewear (17.27 lakhs)," PRIME Database said in a statement.
Haldea said the amount of shares applied for by retail by value (Rs 23,880 crore) was 32 per cent lower than the total IPO mobilisation (in comparison to being 41 per cent higher in 2021-22), showing the lower enthusiasm from retail during the period. The total allocation to retail was Rs 9,841 crore, which was 28 per cent of the total IPO mobilisation (slightly up from 23 per cent in 2021-22).
IPO response was further muted by moderate listing performance. Average listing gain (based on the closing price on listing date) fell to 12 per cent, in comparison to 32 per cent in 2021-22 and 42 per cent in 2020-21. Of the 14 IPOs, six gave a return of over 10 per cent. Harsha Engineers gave a stupendous return of 47 per cent, followed by Syrma SGS (42 per cent) and Dreamfolks (42 per cent). Eleven of the 14 IPOs are trading above the issue price (closing price of September 26, 2022).
Only four out of the 14 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 3,349 crore accounted for just nine per cent of the total IPO amount. Offers for sale by promoters at Rs 2,206 crore accounted for a further six per cent of the IPO amount. On the other hand, the amount of fresh capital raised in IPOs in 2022-23 was Rs 8,641 crore.
Anchor investors collectively subscribed to 31 per cent of the total public issue amount. Domestic Mutual Funds played a more dominant role than FPIs as anchor investors, with their subscription amounting to 18 per cent of the issue amount followed by FPIs at 10 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 17 per cent of the issue amount, again much lower than MFs at 25 per cent.
The first half of the current financial year 2022-23 saw 41 companies filing their offer document with Sebi for approval, in comparison to 87 last year, according to PRIME Database.