Fund raising through initial public offer (IPO) dropped to half in 2022 as against the previous year, market tracking portal primedatabase.com said on Tuesday. Also, overall public equity fund raising in 2022 was just 55 per cent of 2021.

The portal said that 40 Indian corporates raised ₹59,412 crore through main-board IPOs in 2022, half of the ₹1,18,723 crore (all-time high) mobilised by 63 IPOs in 2021. Pranav Haldea, Managing Director, PRIME Database Group, said out of the total 35 per cent or around ₹20,500 crore was by LIC alone. This was followed by Delhivery (₹5,235 crore) and Adani Wilmar (₹3,600 crore). The average deal size was a high of ₹1,485 crore.

According to Haldea, as many as 17 out of the 40 IPOs, or nearly half, came in the last two months of the year alone which shows that volatile conditions were prevalent through most of the year which are not conducive to IPO activity. Only one of the 40 IPOs (Delhivery) was from a new-age technology company (NATC) (in comparison to seven NATC IPOs raising ₹42,826 crore in 2021), pointing towards a slowdown in IPOs from this sector.

Response to offers

The overall response from the public was moderate. Of the 38 IPOs for which data is currently available, 12 IPOs received a mega response of more than 10 times (of which two were more than 50 times), while seven were subscribed more than 3 times. The balance of 19 IPOs was subscribed between 1 and 3 times. The new HNI segment (₹2-10 lakh) saw an encouraging response with 11 IPOs receiving a response of more than 10 times from this segment.

Response of the retail investors also moderated in comparison to the previous year. 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 lakh) followed by Harsha Engineers (23.86 lakh) and Adani Wilmar (18.96 lakh).

The amount of shares applied for by retail by value (₹46,437 crore) was 22 per cent, lower than the total IPO mobilization (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 ₹16,837 crore, which was 28 per cent of the total IPO mobilization (up from 20 per cent in 2021).

Haldea says IPO response was further muted by moderate listing performance. Average listing gain (based on 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 so far, 17 gave a return of over 10 per cent. DCX Systems gave a stupendous return of 49 per cent followed by Harsha Engineers and Hariom Pipe Industries (47 per cent each). About 23 of the 38 IPOs are trading above the issue price (closing price of December 30, 2022).

Outlook for 2023

The pipeline continues to remain strong — 54 companies proposing to raise a huge ₹84,000 crore currently have SEBI approval; 33 companies looking to raise about ₹57,000 crore await approval (out of these 87 companies, eight are NATCs looking to raise roughly ₹29,000 crore).

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