IPO fundraising in India halves in 2022

Forty Indian corporates raised Rs 59,412 crore through main board IPOs in calendar year 2022, half of the Rs 1,18,723 crore (all-time high) mobilised by 63 IPOs in 2021, according to PRIME Database, India's premier database on the primary capital market.

According to Pranav Haldea, Managing Director, PRIME Database Group, Rs 20,557 crore or a huge 35 per cent of the amount raised in 2022 was by LIC alone.

Overall public equity fundraising also dropped by 55 per cent to Rs 90,995 crore from Rs 2,02,048 crore in 2021.

The largest IPO in 2022, which was also the largest Indian IPO ever, was from Life Insurance Corp.of India. This was followed by Delhivery (Rs 5,235 crore) and Adani Wilmar (Rs 3,600 crore). The average deal size was a high Rs 1,485 crore.

According to Haldea, as many as 17 out of the 40 IPOs, or nearly half, came in the last two months of the year alone, which shows the volatile conditions prevalent through most of the year which are not conducive for IPO activity.

Only 1 out of the 40 IPOs (Delhivery) was from a new age technology company (NATC) (in comparison to 7 NATC IPOs raising in Rs 42,826 crore in 2021) pointing towards the slowdown in IPOs from this sector.

The overall response from the public, according to Prime Database, was moderate. Of the 38 IPOs for which data is available presently, 12 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 19 IPOs were oversubscribed between 1 to 3 times. The new HNI segment (Rs2- 10 lakh) saw an encouraging response with 11 IPOs receiving a response of more than 10 times from this segment.

In comparison to 2022, the response of retail investors also moderated. The average number of applications from retail dropped to just 5.92 lakh, in comparison to 14.25 lakh in 2021 and 12.77 lakh in 2020. The highest number of applications from retail were received by LIC (32.76 lakhs) followed by Harsha Engineers (23.86 lakhs) and Adani Wilmar (18.96 lakhs).

The amount of shares applied for by retail by value (Rs 46,437 crore) was 22 per cent lower than the total IPO mobilisation (in comparison to being 42 per cent higher in 2021) showing the lower level of enthusiasm from retail during the period. The total allocation to retail, however, was Rs 16,837 crore which was 28 per cent of the total IPO mobilisation (up from 20 per cent in 2021).

According to Haldea, IPO response was further muted by moderate listing performance. Average listing gain (based on closing price on listing date) fell to 10 per cent, in comparison to 32.19 per cent in 2021 and 43.82 per cent in 2020.

Of the 38 IPOs which have got listed thus far, 17 gave a return of over 10 per cent. DCX Systems gave a stupendous return of 49 per cent followed Harsha Engineers and Hariom Pipe Industries (47 per cent each).

Twenty-three of the 38 IPOs are trading above the issue price (closing price of December 30, 2022).