IPO fundraising at highest ever in 2021-22

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A total of 52 Indian corporates raised an all-time high Rs 1.11 lakh crore through main board IPOs in the financial year 2021-22. This was despite the last quarter seeing only five IPOs, according to Pranav Haldea, Managing Director, Prime database.

The 2021-22 IPO amount was over 3.5 times Rs 31,268 crore raised through 30 IPOs in 2020-21. The previous best year was 2017-18 in which Rs 81,553 crore was raised.

IPOs from new age loss-making technology startups, strong retail participation and huge listing gains were the other key highlights of 2021-22.

Overall public equity fundraising, however, dropped to Rs 1.70 lakh crore from Rs 1.90 lakh crore in the preceding year.

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The largest IPO in 2021-22, which was also the largest Indian IPO ever, was from One 97 Communications (Paytm) for Rs 18,300 crore. This was followed by Zomato (Rs 9,375 crore), Star Health (Rs 6,019 crore), PB Fintech (Policybazaar) (Rs 5,710 crore), Sona BLW (Rs 5,550 crore) and FSN E-Commerce (Nykaa) (Rs 5,350 crore). As can be seen, four out of the top 6 IPOs were from new age technology companies (NATCs) which together raised Rs 38,734 crore.

The average deal size was a high Rs 2,143 crore.

The overall response from the public, according to Prime Database, was very good. Of the 50 IPOs for which data is available as of now, 29 IPOs received a mega response of more than 10 times (of which 5 IPOs more than 100 times) while 8 IPOs were oversubscribed by more than 3 times. The balance 13 IPOs were oversubscribed between 1 to 3 times.

The year witnessed tremendous response from retail investors as well. The average number of applications from retail was 14.05 lakh, in comparison to 12.73 lakh in 2020-21 and 6.88 lakh in 2019-20. The highest number of applications from retail in 2021-22 were received by Glenmark Life Sciences (33.95 lakhs) followed by Devyani International (32.67 lakhs) and Latent View (31.87 lakhs).

The amount of shares applied for by retail by value was 17 per cent higher than the total IPO mobilisation (147 per cent in 2020-21) showing the strength and interest of retail investors during the year. However, the total allocation to retail was just Rs 22,017 crore which was 20 per cent of the total IPO mobilisation (down from 32 per cent in 2020-21).

According to Haldea, success of the IPOs was further buoyed by strong listing performance. Of the 50 IPOs which have got listed thus far, 30 gave a return of over 10 per cent (based on closing price on listing date).

Sigachi Industries gave a stupendous return of 270 per cent followed by Paras Defence (185 per cent) and Latent View (148 per cent). 32 of the 50 IPOs are trading above the issue price (closing price of 15th March, 2022). Average listing gain was 33 per cent, in comparison to 36 per cent in 2020-21 and 24 per cent in 2019-20.

Twenty-two out of the 52 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 25,207 crore accounted for 23 per cent of the total IPO amount. Offers for sale by promoters at Rs 33,258 crore accounted for a further 30 per cent of the IPO amount. On the other hand, the amount of fresh capital raised in IPOs in 2021-22 was still very high Rs 40,459 crore, which was greater than the last 5 years combined.