IPO fundraising in India drops by half in 2022-23, but third-highest ever recorded

Overall public equity fundraising in India also decreased by 56% to ₹76,076 crore in 2022-23 from ₹1,73,728 crore in 2021-22.

37 Indian companies raised ₹52,116 crore through main board initial public offerings (IPOs) in the financial year 2022-23, according to a report. This amount is less than half of the all-time high of ₹1,11,547 crore raised by 53 IPOs in 2021-22.

Pranav Haldea, the managing director of PRIME Database, a research firm focused on the primary capital market in India, added that LIC alone contributed ₹20,557 crore, which is 39% of the total amount raised in 2022-23. Without LIC, the IPO fundraising would have been only ₹31,559 crore. Nonetheless, the amount raised in 2022-23 is still the third-highest ever in terms of IPO fundraising.

The report added that overall public equity fundraising in India also decreased by 56% to ₹76,076 crore in 2022-23 from ₹1,73,728 crore in 2021-22.

Largest IPOs in 2022-23

The largest IPO in 2022-23, which also happened to be the largest ever Indian IPO, was from Life Insurance Corp. of India, followed by Delhivery (₹5,235 crore) and Global Health (₹2,206 crore), with an average deal size of ₹1,409 crore.

25 of the 37 IPOs were launched in just three months of the year (May, November, and December), which according to Haldea indicated, "the volatile market conditions that were unfavorable for IPO activity throughout most of the year".

The report further noted that the last quarter of 2022-23 saw the lowest amount of IPO fundraising in the last nine years.

Out of the 37 IPOs, only two (Delhivery and Tracxn) were from new age technology companies (NATC), in comparison to five NATC IPOs raising ₹41,733 crore in 2021-22, indicating a slowdown in IPO activity from this sector.

Less retail participation

As per the report, compared to the previous financial year, the response of retail investors was found to be less enthusiastic. The average number of applications from retail investors reduced to just 5.64 lakh, down from 13.32 lakh in 2021-22 and 12.73 lakh in 2020-21.

Moderate listing gains

Haldea noted that moderate listing performance had further muted the response to IPOs. The average listing gain, based on the closing price on the listing date, fell to 9.74%, a sharp decline from 32.59% in 2021-22 and 35.68% in 2020-21.

Out of the 36 IPOs that have been listed so far, only 16 provided a return of over 10%, with DCX Systems leading the pack with a return of 49%, followed by Harsha Engineers (47%) and Electronics Mart (43%).

21 of the 36 IPOs are currently trading above the issue price as of the closing price on March 24, 2023.