Fundraising via initial public offers (IPO) more than halved to Rs 52,116 crore in FY23 from a record high of Rs 1,11,547 crore in FY22, with LIC alone accounting for 39 per cent of total funds raised by corporates this year.
“Rs 20,557 crore or a huge 39 per cent of the amount raised in 2022-23 was by LIC alone, without which the IPO fundraising would have been just Rs 31,559 crore. To be sure though, the amount raised in 2022-23 is still the third highest ever in terms of IPO fund raise,” said Pranav Haldea, Managing Director at PRIME Database Group.
A total of 37 main board IPOs hit the market in FY23 against 53 IPOs in FY22.
LIC’s was the largest Indian IPO ever. It was followed by Delhivery (Rs 5,235 crore) and Global Health (Rs 2,206 crore). As per PRIME Database, the average IPO deal size was a high Rs 1,409 crore.
“As many as 25 out of the 37 IPOs came in just 3 months of the year (May, November and December), which shows the volatile conditions prevalent through most of the year which are not conducive for IPO activity,” Haldea said.
In fact, the fourth quarter of FY23 saw the lowest amount being raised in the last 9 years, PRIME Database suggested. Only 2 out of the 37 IPOs (Delhivery & Tracxn) were from a new age technology companies in comparison to 5 such IPOs in 2021-22, pointing towards the slowdown in IPOs from the sector.
The overall response from the public, according to primedatabase.com, was moderate. Of the 36 IPOs, for which data is available presently, 11 IPOs received a mega response of more than 10 times (of which 2 IPOs more than 50 times) while 7 IPOs were oversubscribed by more than 3 times.
The balance 18 IPOs were oversubscribed between 1 to 3 times. The new HNI segment (Rs 2-Rs 10 lakh) saw an encouraging response, with 11 IPOs receiving a response of more than 10 times.
Retail demand moderated. The average number of applications from retail dropped to just 5.64 lakh, in comparison to 13.32 lakh in FY22 and 12.73 lakh in FY21.
The highest number of applications from retail were received by LIC (32.76 lakh) followed by Harsha Engineers (23.86 lakh) and Campus Activewear (17.27 lakh).
The amount of shares applied for by retail by value (Rs 41,671 crore) was 20 per cent lower than the total IPO mobilisation (in comparison to being 17 per cent higher in 2021-22) showing the lower level of enthusiasm from retail during the period. The total allocation to retail, however, was Rs 14,308 crore which was 28 per cent of the total IPO mobilisation (up from 20 per cent in 2021-22).
According to Haldea, IPO response was further muted by moderate listing performance. Average listing gain (based on closing price on listing date) fell to 9.74 per cent, in comparison to 32.59 per cent in FY22 and 35.68 per cent in FY21. Of the 36 IPOs which have got listed thus far, 16 gave a return of over 10 per cent. DCX Systems gave a stupendous return of 49 per cent followed Harsha Engineers (47 per cent) and Electronics Mart (43 per cent). 21 of the 36 IPOs are trading above the issue price (closing price of 24th March, 2023).
Anchor investors collectively subscribed to 32 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 17 per cent of the issue amount with FPIs at 11 percent. Qualified institutional buyers (including Anchors Investors) as a whole subscribed to 59 per cent of the total public issue amount. FPIs, on an overall basis, as anchors and QIB, subscribed to 21 per cent of the issue amount, again slightly lower than MFs at 23 per cent.
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