IPO fundraising drops 17% in 2023; issues worth around ₹70,000 crore in pipeline this year
- 57 Indian corporates raised ₹49,434 crore in 2023 through main board IPOs, a 17% decrease from the previous year, according to primedatabase. 182 SME IPOs raised a total of ₹4,681 crore in 2023, a significant increase from the previous year.
With main board IPOs, 57 Indian corporates raised ₹49,434 crore in 2023, a 17% decrease from the ₹59,302 crore raised by 40 IPOs in 2022, according to primedatabase.com.
According to the report, IPO mobilisation rose by 28% from the previous year, excluding the massive LIC IPO that took place in 2022.
The total amount raised for public equity rose by 59% to ₹1,44,283 crore in 2023 from ₹90,886 crore in 2022, stated Pranav Haldea, Managing Director of PRIME Database Group.
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The amount of activity in the small and midsize enterprise (SME) segment increased significantly in 2023, with 182 SME IPOs raising a total of ₹4,681 crore. This is 150% more than the ₹1,875 crore from 109 IPOs in 2022. The amount of SME IPOs of Shri Balaji Valve, Akanksha Power & Infra, Kay Cee Energy & Infra, and Kaushalya Logistics has been calculated on the basis of lower price band ECB data through October, 2023. Spectrum Talent Management's ₹99.99 crore IPO was the biggest SME IPO.
87 companies submitted offer documents to SEBI for approval in 2023 (compared to 89 in 2022). In contrast, 40 companies seeking to raise approximately ₹70,000 crore allowed their approval to lapse in 2023, three companies seeking to raise ₹3,550 crore withdrew their offer documents, and SEBI returned the offer documents of six more companies trying to raise ₹10,800 crore.
IPO Performance 2023
The biggest mainboard IPO of 2023 was Mankind Pharma, raising ₹4,326 crore. Tata Technologies ( ₹3,043 crore) and JSW Infrastructure ( ₹2,800 crore) came next. Surprisingly, Udayshivakumar Infra raised the least amount of money through an IPO, only raising ₹66 crore, while Plaza Wires raised ₹71 crore. Comparing the average deal size to 2022 and 2021, it dropped to ₹867 crore from ₹1,483 crore and ₹1,884 crore, respectively.
In just four months of the year (September: 14, December: 11, November: 8, and August: 7), as many as forty out of the 57 IPOs were wrapped up.
"While we saw companies from multiple sectors tapping the IPO market in 2023, one key sector which had a limited presence was BFSI with just ₹6,190 crore (or 13 per cent) being raised by companies from this sector (in comparison to 46 per cent in 2022). New age Technology Companies (NATC) too were few at just 2 (Yatra and Mamaearth)," said Haldea.
IPO Subscription 2023
According to primedatabase.com, there was an excellent response from the public overall. Nine IPOs were oversubscribed by more than three times, out of the 57 IPOs, and 41 IPOs received a mega response of more than ten times (of which 16 IPOs more than fifty times).
The reaction from retail investors also rose significantly when compared to 2022. From 5.66 lakh in 2022 to 13.21 lakh on average, more retail applications were submitted. With 52.11 lakhs applications, Tata Technologies received the most from the retail sector. DOMS Industries received 41.30 lakhs, and INOX India received 37.34 lakhs.
IPO Listing Performance 2023
Strong listing performance, according to Haldea, further boosted the IPO response. From 11% in 2022 to 29% in 2023, the average listing gain (based on closing price on listing date) increased.
"Of the 57 IPOs, 40 gave a return of over 10%. Tata Technologies gave a stupendous return of 163% followed Ideaforge (93%) and Utkarsh Small Finance Bank (92%). 53 of the 57 IPOs are trading above the issue price (closing price of 1st January, 2024) with an average return of 46%," added Haldea.
IPO investors
Out of the 57 IPOs that hit the market, 21 of them had a former PE/VC investor who sold IPO shares. A total of ₹10,968 crore, or 22% of the IPO amount, was offered for sale by these PE/VC investors. The remaining 31% of the IPO proceeds came from private promoter offers for sale worth ₹15,196 crore.
In contrast, the total fresh amount raised through IPOs in 2023 was ₹20,662 crore, or 42% of the total, which was a record high in terms of percentage share over the previous seven years.
An total of 34% of the public issue amount was subscribed for by anchor investors. The aggregate amount of the public issue was subscribed to by 57% of the qualified institutional buyers, which included Anchors Investors. FPIs, on an overall basis, as anchors and QIB, subscribed to 23% of the issue amount, more than Mutual Funds at 17%.
Outlook for 2024
“The pipeline continues to remain strong. 27 companies proposing to raise ₹28,500 crore are presently holding SEBI approval while another 36 companies looking to raise about ₹40,500 crore are awaiting SEBI approval (Out of these 63 companies, 3 are NATCs which are looking to raise roughly ₹16,000 crore). According to Haldea, the next couple of months should see several IPOs being launched before a pause on account of the general elections,” the report said.
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