IPOs pick up steam in last three months of 2022 – Strong pipeline likely to propel listings in 2023

• It has been a dull year for initial public offerings (IPOs) this year because of several concerns including the Russia-Ukraine war, rising inflation, higher interest rates and a strong US dollar.
• However, the last few months of 2022 saw a pick up in IPOs.
• The number of IPOs launched and the funds raised through them so far in 2022 have halved from last year.
• Analysts believe the IPO market could witness recovery in the coming months thanks to a strong pipeline and the recent successes of IPOs.
• Popular garments and furnishings retailer Fabindia, Sachin Bansal-founded Navi Technologies and Biba Fashion are among companies that may list next year.
• Currently, there are 61 companies looking to collectively raise ₹92,403 crore via public listing.

The primary markets have turned optimistic since September, compensating for a lull in initial public offerings (IPOs) for a greater part of this year. Most of the 15 companies that listed on the bourses in the last quarter of 2022 have rewarded investors.

Several concerns – the Russia-Ukraine war, rising inflation, higher interest rates and a strong dollar – led to a halving in the number of IPOs launched and the funds raised through them so far in 2022 compared to last year.

So far this year, ₹55,101 crore has been raised through 32 IPOs (as of December 6), down from ₹1.18 lakh crore raised through 64 IPOs in 2021, shows data from Prime Database.

In fact, nearly 40% of the amount raised this year has been through one IPO – that of insurance behemoth Life Insurance Corporation (LIC), which garnered over ₹21,000 crore from the public.

“Between last year and this year there has been a slowdown in the IPO market. The difference is even more noticeable if you remove LIC, which contributed to a lion’s share of the amount this year. Primary market always follows the secondary market, albeit with a lag. Last year, markets were extremely bullish with a lot of liquidity floating around, which resulted in a huge number of IPOs,” Pranav Haldea, managing director of Prime Database told Business Insider India.

The last few months, however, have seen an increase in the number of companies taking the IPO route.

Issuances seen across sectors, except new-age tech
A report by EY on IPO trends highlights that the end of Q3 (July-September) has seen an uptick in IPOs, after a slowdown post Q2. Technology, banking, capital markets, media and entertainment were the most active sectors in the IPO market in Q3, says the report

“Issuances are happening across sectors, except for new-age tech companies. Now, companies have also been asked for additional disclosures, so it may be a while till we see a new-age tech company launch its IPO,” added Haldea.

New-age tech companies like Zomato, Paytm and Nykaa that listed last year and Delhivery, which listed this year, have sharply corrected, making investors wary. Moreso, the stock of LIC, which was India’s largest IPO, too corrected since listing in May this year.

Analysts, however, believe the IPO market could witness recovery in the coming months thanks to a strong pipeline and the success of IPOs over the last few months.

Upcoming IPOs for 2023
Currently, there are 61 companies looking to collectively raise ₹92,403 crore via public listing. These are companies that have already received approval from market regulator Securities and Exchange Board of India (SEBI) but have refrained from opening their IPOs due to weak market sentiment, which could also impact valuations.

“IPO happens when there is agreement on valuation between issuer and investors. Companies that have not yet launched their IPO even after SEBI approval are probably waiting for better valuations and perhaps do not have any fresh capital requirement or pressure from PE/VC investors to exit,” added Haldea.

With the reemergence of the IPO wave, these companies could launch their IPOs next year, say experts.

Popular garments and furnishings retailer Fabindia, Sachin Bansal-founded Navi Technologies, and Biba Fashion are among companies that may list next year.

Top ten largest IPOs among 61 that have received SEBI approval
Source: Prime Database

Apart from these, 32 companies are in line to collectively raise ₹53,115 crore after SEBI approves their draft prospectus. Hotel chain OYO, Snapdeal and condom manufacturer Mankind Pharma are among companies awaiting the regulator’s nod.

This strong pipeline augurs well for the IPO market in 2023, despite predictions of volatile global markets and other external pressures, analysts say.

“While volatility in the overall global markets and other macro factors will continue to affect investor sentiments, the pipeline of IPOs and momentum created by successful IPOs towards the end of Q3 2022 could lead to a recovery in the market,” said Adarsh Ranka, financial accounting advisory services leader, partner with an Indian member firm of EY Global.


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