Private equity and venture capital firms are showing renewed interest in capitalising on the optimism in the secondary markets, with the benchmark indices hitting fresh record highs.
Data shows that the share of offer for sale (OFS) – shares offloaded by existing investors like PE/VCs and others -- in the overall IPO mobilisation this year has inched higher than the quantum of fresh capital raised. This was not the case till a couple of months back as the share of fresh capital was higher.
In 2024, the share of OFS in the total issue size was at 50.37 percent as compared to fresh issue percent of 49.63 percent.
Offer for sale portion of an IPO refers to the chunk of shares that are sold by existing shareholders of the company and the proceeds of such shares goes to the selling shareholders. Fresh issue of shares, on the other hand, brings the money to the company’s books that can be used for capex and other things.
Of the 50 issues that have been launched this calendar year till August, the total amount raised through OFS stands at Rs 26,924 crore, slightly surpassing the Rs 26,528 crore garnered from fresh issue of shares, according to data from Prime Database.
This assumes significance as the trend has reversed only recently -- till July, the share of fresh issue of shares was higher.
As of July 31, 43 firms had secured around Rs 47,872 crore via IPOs; out of which 51.51 percent was from fresh issues. Fresh issues alone brought in around Rs 24,657 crore, while Rs 23,214.67 crore was raised via OFS during the same period.
“Currently, the IPO segment is looking very lucrative and going ahead we could also see fund raising happening a lot more via OFS,” said Kranthi Bathini of Wealthmills Securities. He added that, going ahead, OFS pipeline looks better as a lot of public sector companies are also lined up for OFS.
However, historically, the amount raised through fresh issues has always trailed behind that raised via OFS.
In 2023, fresh capital raised amounted to Rs 20,662 crore, compared to Rs 28,772 crore through OFS. Similarly, in 2022, fresh issues brought in Rs 17,658 crore, significantly lower than the Rs 41,642 crore raised through OFS.
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