$10 billion of equity to be raised from IPO market in next 1-2 years: Kotak Investment Banking

The overall capital market activity in 2023 ($38 billion) was back near the peak of CY20 ($39 billion)

Equity worth $10 billion is expected to be raised from the IPO market in the next 12-24 months, according to estimates by leading investment banker company Kotak Investment Banking (KIB). Sharing their outlook for the calendar year 2024, S Ramesh, managing director and CEO of KIB said that “the funding winter will end by 2024 with the return of public market dynamism”.

2023 was the year of sell-downs with $24 billion of activity seen across the street. "Private equity exits through open market operations are currently at an all-time high and are anticipated to further increase," Ramesh said. The momentum in sell-downs/block deals will be driven by PE/VC exits supported by strong institutional flows.

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KIB expects IPO volumes to double this year compared to CY23 with a significant uptick in average deal size. The overall capital market activity in 2023 ($38 billion) was back near the peak of CY20 ($39 billion). There was moderation in volumes with a reduction in average IPO size. The average size in CY22 was $190 million which came down to 109.5 million in CY23.

Mankind Pharma, Tata Technologies, JSW Infra and India Renewable Energy Development Agency (IREDA) were the biggest IPOs of 2023 and all of them were listed at a premium on bourses.

Large companies in sectors such as manufacturing, healthcare, FIG (financial institutions group), consumer and digital are evaluating IPOs in CY24. Further, KIB said that the primary market is evolving beyond the traditional BFSI sector, diversifying into emerging areas such as electric vehicles, fintech, and consumer tech.

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The share of FIG in IPOs fell from 56 percent in CY2015-18 to 22 percent in CY2019-22 and further to 13 percent in CY23. “It’s no longer the torch bearer in the IPO market,” Ramesh added. Instead, new-age tech, driven by Paytm, Zomato and Nykaa emerged as the leader in the period CY2019-22.

In 2024 so far, around 27 companies have received SEBI approval to raise a combined amount of Rs 28,500 crore and another 33-36 companies awaiting approval to raise a total of Rs 40,500 crore. Out of these 63 companies, 3 are new-age technology companies, namely OYO, Digit Insurance and First Cry.

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