Fundraising was aided by liquidity inflows, QIPs by banks, retail participation in IPOs
India’s equity markets remained undeterred by the turmoil caused by covid-19 as companies raised a record ₹1.89 trillion this financial year, according to a report by Prime Database.
The fundraising was fuelled by strong liquidity inflows, robust Qualified Institutional Placements (QIPs) by banks and other financial institutions, and strong participation of retail investors in initial public offerings (IPOs) on hopes of huge listing gains.
As per the report, ₹31,511 crore was raised through IPOs, including those of small and medium enterprises (SMEs), while an additional ₹78,731 crore was raised through qualified institutional placements (QIPs). IPO activity this year surged 54% from ₹20,350 crore raised through 13 IPOs in 2019-20. The average size of an IPO was ₹1,042 crore in FY21. Gland Pharma’s ₹6,480 share sale was the biggest IPO this year.
“Response to IPOs was further buoyed by strong listing performance. Of the 28 IPOs which got listed, 19 gave a return of over 10% based on closing price on listing date. Burger King gave a stupendous return of 131% followed by Happiest Minds Technologies with 123% and Indigo Paints with 109%. Moreover, 18 of the 28 IPOs listed so far are trading above the issue price," said Prime Database.
The year, however, saw reduced activity on the SME platform. There were only 28 SME IPOs in FY21 worth ₹243 crore, as against 45 IPOs worth ₹436 crore in FY20.
Offers for sale (OFS) through stock exchanges, aimed at diluting promoter holdings, increased to ₹30,114 crore from ₹17,326 crore last year. Tata Communications’ OFS was the largest with ₹5,386 crore, followed by Hindustan Aeronautics Ltd with ₹4,961 crore and IRCTC with ₹4,408 crore. OFS comprised 11% of the total collected in the equity markets.
Follow-on public offerings (FPOs) fetched ₹15,029 crore while infrastructure investment trusts or InvITs made up the remaining ₹33,515 crore.
Already-listed companies found the QIP route attractive, with 31 companies raising ₹78,731 crore—the most in a financial year, and 54% more than the ₹51,216 crore raised in the previous year. ICICI Bank’s QIP was the largest, raising ₹15,000 crore, accounting for 19% of the total amount. Banks, NBFCs and real estate firms dominated QIP activity, accounting for ₹66,141 crore or 84% of the overall amount, it said.
“Public Offers of IRFC, Mazagon Dock, Railtel and OFS of Bharat Dynamics, HAL, IRCON International, IRCTC, RVNL, SAIL and Tata Communications constituted a major share of divestment proceeds aggregating to ₹22,594 crore. FY21 saw many buybacks of EIL, GAIL, HPCL, KIOCL, NMDC, NTPC, NALCO and RITES totaled to ₹6,441 crore," said Prime Database.
Looking ahead, Prime Database said, FY22 could see more volatility in the secondary market, potentially affecting fundraising plans of companies. “The IPO pipeline continues to remain strong with 18 companies holding Sebi approval to raise nearly ₹18,000 crore and another 14 companies awaiting nod to raise nearly ₹23,000 crore," it said.