IPO fundraising hit a 9-year low in Q4 of FY23: Prime Database

Thirty-seven Indian corporates raised Rs 52,116 crore through main board IPOs in the financial year 2022-23, less than half of the Rs 1.11 lakh (all-time high) mobilised by 53 IPOs in 2021-22, according to Primedatabase, the country's premier database on the primary capital market.

According to Pranav Haldea, Managing Director, Prime Database Group, as many as 25 out of the 37 IPOs came in just three months of the year (May, November and December), which shows the volatile conditions prevalent through most of the year which are not conducive for IPO activity.

In fact, the fourth quarter of 2022-23 has seen the lowest amount being raised in the last nine years.

Haldea said Rs 20,557 crore or a huge 39 per cent of the amount raised in 2022-23 was by LIC alone, without which the IPO fundraising would have been just Rs 31,559 crore.

To be sure though, the amount raised in 2022-23 is still the third highest ever in terms of IPO fundraising.

The largest IPO in 2022-23, which was also the largest Indian IPO ever, was from Life Insurance Corp of India. This was followed by Delhivery (Rs 5,235 crore) and Global Health (Rs 2,206 crore). The average deal size was a high Rs 1,409 crore.

Only 2 out of the 37 IPOs (Delhivery & Tracxn) were from a new age technology company (NATC) (in comparison to 5 NATC IPOs raising Rs 41,733 crore in 2021-22) pointing towards the slowdown in IPOs from this sector.

The overall response from the public was moderate. Of the 36 IPOs for which data is available presently, 11 IPOs received a mega response of more than 10 times (of which 2 IPOs more than 50 times) while 7 IPOs were oversubscribed by more than 3 times. The balance of 18 IPOs was oversubscribed between 1 to 3 times.

In comparison to 2021-22, the response of retail investors also moderated. The average number of applications from retail dropped to just 5.64 lakh, in comparison to 13.32 lakh in 2021-22 and 12.73 lakh in 2020-21. The highest number of applications from retail were received by LIC (32.76 lakhs) followed by Harsha Engineers (23.86 lakhs) and Campus Activewear (17.27 lakhs), Prime Database said.

The number of shares applied for by retail by value (Rs 41,671 crore) was 20 per cent lower than the total IPO mobilisation (in comparison to being 17 per cent higher in 2021-22) showing the lower level of enthusiasm from retail during the period.

According to Haldea, IPO response was further muted by moderate listing performance. Average listing gain (based on the closing price on the listing date) fell to 9.74 per cent, in comparison to 32.59 per cent in 2021-22 and 35.68 per cent in 2020-21.

Of the 36 IPOs which have got listed thus far, 16 gave a return of over 10 per cent. DCX Systems gave a stupendous return of 49 per cent followed by Harsha Engineers (47 per cent) and Electronics Mart (43 per cent). Twenty-one of the 36 IPOs are trading above the issue price (closing price of March 24, 2023).

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