Nearly half of the IPO in 2022 came in the last two months of the year alone, which shows the volatile conditions prevalent through most of the year which are not conducive for IPO activity
Atotal of 40 Indian companies raised Rs 59,412 crore through main board IPOs in the calendar year 2022, which is half of the Rs 1,18,723 crore (all-time high) mobilised by 63 IPOs in 2021, according to data from primary market tracking firm Prime Database. Out of the total fundraising via IPO in 2022, about Rs 20,557 crore or a huge 35 per cent of the amount raised in 2022 was by LIC alone.
Pranav Haldea, managing director of Prime Database Group, said the overall public equity fundraising also dropped by 55 per cent to Rs 90,995 crore from Rs 2,02,048 crore in 2021.
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“The largest IPO in 2022, which was also the largest Indian IPO ever, was from Life Insurance Corporation of India. This was followed by Delhivery (Rs 5,235 crore) and Adani Wilmar (Rs 3,600 crore). The average deal size was a high Rs 1,485 crore,” Prime Database said in a report.
Haldea said that as many as 17 out of the 40 IPOs, or nearly half, came in the last two months of the year alone, which shows the volatile conditions prevalent through most of the year which are not conducive for IPO activity.
In the action-packed 2022, Sensex saw 1,000 plus rallies 14 times with the largest single-day gain of 1,736 points on February 15. On the other hand, there have been another 14 instances where the index has crashed at least 1,000 points in a day.
Only one out of the 40 IPOs (Delhivery) was from a new-age technology company NATC, compared with seven NATC IPOs raising in Rs 42,826 crore in 2021, pointing towards the slowdown in IPOs from this sector.
The overall response from the public, according to primedatabase.com, was moderate. Of the 38 IPOs for which data is available currently, 12 IPOs received a mega response of more than 10 times (of which two IPOs more than 50 times), while seven IPOs were oversubscribed by more than three times. The balance 19 IPOs were oversubscribed between one to three times. The new HNI segment (Rs 2-Rs 10 lakh) saw an encouraging response with 11 IPOs receiving a response of more than 10 times from this segment.
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“In comparison to 2022, the response of retail investors also moderated. The average number of applications from retail dropped to just 5.92 lakh, in comparison to 14.25 lakh in 2021 and 12.77 lakh in 2020. The highest number of applications from retail were received by LIC (32.76 lakhs) followed by Harsha Engineers (23.86 lakhs) and Adani Wilmar (18.96 lakhs),” Prime Database said in the report.
The amount of shares applied for by retail by value (Rs 46,437 crore) was 22 per cent lower than the total IPO mobilisation (in comparison to being 42 per cent higher in 2021) showing the lower level of enthusiasm from retail during the period. The total allocation to retail, however, was Rs 16,837 crore which was 28 per cent of the total IPO mobilisation (up from 20 per cent in 2021).
Haldea said IPO response was further muted by moderate listing performance. Average listing gain (based on the closing price on listing date) fell to 10 per cent, in comparison to 32.19 per cent in 2021 and 43.82 per cent in 2020.
Of the 38 IPOs which have got listed thus far, 17 gave a return of over 10 per cent. DCX Systems gave a stupendous return of 49 per cent followed Harsha Engineers and Hariom Pipe Industries (47 per cent each). 23 of the 38 IPOs are trading above the issue price (closing price of 30th December, 2022).
Only 14 out of the 40 IPOs that hit the market had a prior PE/VC investor who sold shares in the IPO. Offers for sale by such PE/VC investors at Rs 7,821 crore accounted for 13 per cent of the total IPO amount. Offers for sale by private promoters at Rs 8,623 crore accounted for 15 per cent of the IPO amount while offers for sale by the government accounted for 35 per cent of the IPO amount. On the other hand, the amount of fresh capital raised in IPOs in 2022 was Rs 17,662 crore.
Anchor investors collectively subscribed to 32 per cent of the total public issue amount. Domestic mutual funds played a more dominant role than FPIs as anchor investors with their subscription amounting to 15 per cent of the issue amount with FPIs at 12 percent. Qualified institutional buyers (including anchors investors) as a whole subscribed to 57 per cent of the total public issue amount. FPIs, on an overall basis, as anchors and QIB, subscribed to 21 per cent of the issue amount, again slightly lower than MFs at 22 per cent.
The year 2022 saw 85 companies filing their offer document with SEBI for approval, in comparison to 128 last year. On the other hand, 27 companies looking to raise nearly Rs 37,000 crore let their approval lapse in 2022 and seven companies looking to raise Rs 4,200 crore withdrew their offer document.
