Highest-ever IPO fundraising in 2021, breaches Rs 1 lakh-crore mark for first time in a decade: Report

The calendar year 2021 witnessed maximum buzz in the primary market as 63 Indian corporates raised an all-time high of Rs 1,18,704 crore through main board initial public offers. The current year saw a surge of 4.5 times fundraising as compared to 2020 with 15 companies being listing bourses.

A report analyzed and released by PRIME Database Group’s managing director Pranav Haldea on Thursday said that these IPOs from new-age loss-making technology startups, along with strong retail participation and huge listing gains were the key highlights in the primary market this year.

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In the last decade, so far 2017 had been the best year before the current year in terms of fundraising through IPOs. In the year 2017, at least Rs 68,827 crore was raised, while in the last year Rs 26,613 crore was raised through IPOs, according to the report.

Similarly, the overall public equity fundraising crossed Rs 2 lakh crore mark to reach Rs 2,02,009 crore in calendar 2021 through various instruments. This is over 14 per cent higher than the previous highest amount which is Rs 1,76,914 crore, the Prime Database group’s report also mentioned.

The large IPOs from new generation companies such as Paytm, Zomato, Nykaa contributed most to the fundraising through primary markets. The issue size of One-97 Communications backed Paytm has been the biggest in a decade at Rs 18300 crore and the average deal size was a high Rs 1,884 crore.

According to primedatabase.com, the overall response from the public for IPOs launched in 2021 was very good, as 36 of the overall IPOs issue had been subscribed over 10 times. While 6 issues witnessed over 100 times subscription, 8 IPOs being oversubscribed by 3 times, it also said.

The year also witnessed tremendous response from retail investors as well, as the average number of applications from retail was 14.36 lakh, in comparison to 12.77 lakh in 2020 and 4.05 lakh in 2019.

In all of these IPOs, the highest number of applications from retail in 2021 was received by Glenmark Life Sciences (33.95 lakhs) followed by Devyani International (32.67 lakhs) and Latent View (31.87 lakhs), the Prime Database group’s report pointed out.

According to Haldea, the success of these IPOs launched in 2021 was further buoyed by strong listing performance, as 34 out of 58 IPOs, which have got listed so far, gave a return of over 10 per cent based on closing price on the debut date.

In this regard, Sigachi Industries gave a stupendous return of 270 per cent followed by Paras Defence 185 per cent and Latent View 148 per cent. Similarly, 40 of these 58 IPOs are trading above the issue price as of December 22, 2021, closing price.

The current year witnessed an average listing gain of 32 per cent premium as compared to 44 per cent in 2020 and 19 per cent in 2019, the report pointed out.

Not just the launch of IPOs, while the year 2021 also saw record number of filings with the Securities and Exchange Board of India (SEBI). At least 115 companies filed their offer document with market regulator for approval. This is compared to combine 50 filings to SEBI in 2019, 2020, according to Haldea.  

The other players that led the year 2021 achieve Rs 1 lakh crore feat were anchor investors, as they collectively subscribed to 39 per cent of the total public issue amount, the report added.

The Foreign Portfolio Investors played a dominant role as anchor investors, with their subscription amounting to 24 per cent of the amount followed by Mutual Funds at 11 percent.  

Outlook 2022

For an outlook for 2022, the report suggests that the IPO pipeline continues to remain strong in the coming year with 35 companies holding SEBI approval proposing to raise roughly Rs 50,000 crore and another 33 companies which are awaiting SEBI approval to raise about Rs. 60,000 crore.

According to Haldea, inflationary concerns resulting in rate hikes can be expected which shall reduce the amount of liquidity available, which along with how Omicron variant plays out, shall have an impact on the secondary market and consequently the primary market.