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The total amount raised through initial public offerings (IPOs) more than halved to INR 52,116 crore in FY23 from an all-time high collection of INR 1,11,547 crore in the previous fiscal, according to an analysis reported by PTI. According to Prime Database, just 37 companies hit the main board listing process in FY23, much lower than 53 IPOs in FY22.
“INR 20,557 crore which is 39% of the total amount raised in FY23 was by LIC alone, without which the IPO fundraising would have been just INR 31,559 crore in the year. Yet, FY23 is still the third highest in terms of IPO fund-raise. Overall public equity fundraising also dropped by 56% to INR 76,076 crore in the reporting year from INR 1,73,728 crore in FY22,” said Pranav Haldea, managing director of Prime Database Group, in a statement.
An initial public offering (IPO) refers to the process of offering shares of a private corporation to the public in a new stock issuance for the first time. An IPO allows a company to raise equity capital from public investors. An IPO can be said to be seen as an exit strategy for the company’s founders and early investors, realizing the full profit from their private investment.
The report further elaborated that while IPOs were worth INR 54,344 crore (including SME issues) in the year, total fund raising through the capital markets stood at INR 85,021 crore, of which INR 11,231 crore were from the OFS (offer for sale) route, INR 9,335 crore were from QIPs/InvITs/REITs of which INR 1,166 crore were from InvITs/REITs, taking the total equity fund raising to INR 76,076 crore. A total of INR 8,944 crore were mobilised through public bonds, taking the total through IPOs and bonds to INR 85,021 crore.
However, despite being hit by the Covid pandemic, FY21 was the best in overall capital markets performance with the total fund mobilisation from the market scaling to an all-time high of INR 2,00,812 crore, boosted by a record INR 28,440 crore through OFS, INR 33,515 crore InvITs/REITs and INR 15,029 crore of FPOs including from SMEs, noted the report.
Moreover, the report further added that the main-board IPOs included the country’s largest ever issue by Life Insurance Corporation, followed by Delhivery (INR 5,235 crore) and Global Health (INR 2,206 crore). The average deal size hit a high of INR 1,409 crore. As many as 25 of the 37 issues came in just three months of the year (May, November and December) and the fourth quarter was the lowest in the last nine years.
Commenting on the same, Krishna Raghavan, founder of Unlistedkart said that, “The drop in IPO fundraising in FY23 is a reflection of the challenging economic environment that the country has faced during the year. The ongoing pandemic and its impact on the economy, along with the rising inflation and slow economic growth, have led to a cautious approach among investors. However, it is also important to note that the amount raised in FY23 is still the third-highest ever in terms of IPO fundraising, indicating that there is still a significant amount of capital available for companies seeking to go public. Going forward, it is imperative that the government takes proactive steps to address the challenges faced by the economy and create a conducive environment for investors to invest in IPOs. This would include measures such as addressing supply chain disruptions, easing the regulatory burden, and boosting investor confidence through various policy measures. In doing so, the Indian primary capital market can regain its momentum and continue to attract capital from investors.”
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