IPO Fireworks In New Year; Companies Likely To Garner Rs 1.5 Lakh Crore Through Initial Share Sales
The initial share sale is set to dazzle Dalal Street even in 2022, as companies expect earnings of up to Rs 1.5 lakh crore in the new year, continue on a bullish run post 2021 and become the best IPO year in two decades. has gone. Indian market.
Excessive liquidity and increased retail investor participation ensured a sustained enthusiasm in the initial public offering (IPO) sector, with companies raking in over Rs 1.2 lakh crore this year, while the gloom of the pandemic shadowed the broader economy. .
In 2022, the higher amount of funding through the primary market will be driven largely by the mega IPO of state-owned Life Insurance Corporation (LIC). In addition, many new-age digital players are expected to detect early share sales.
All told, the potential impact of the coronavirus pandemic, especially with the emergence of Omicron, may still be a cause for concern.
Venkataraghavan S, managing director and head of Equity Capital Markets at Equirus, said with interest rates rising, there could be some easing of the current frenzy. “But, we do not expect a wholesale collapse of the primary market for equities. Any pandemic-related alarm can certainly throw a spanner at work”.
For the calendar year 2022, he said that since LIC listing is also expected, it is estimated that the amount raised through IPO will be in the range of Rs 1.25 to 1.5 lakh crore.
Sandeep Bhardwaj, CEO, Retail, IIFL Securities, said that new record fundraising can be done through IPOs in 2022 and added that LIC is likely to be the mother of all IPOs in India and will also attract the attention of global investors.
According to a report by global consultancy EY, India recorded the “best IPO year” in two decades, with earnings of over USD 16.9 billion in 2021 with substantial global liquidity, strong earnings and increased retail participation leading to initial share sales. strengthened the position.
Prashant Singhal, Emerging Markets, Technology, Media, Telecom (TMT) leader at EY said that the Indian IPO market has witnessed some great performances this year, with new age tech companies leading the way.
According to him, the diversified and industrial products and consumer products and retail sectors also saw good traction. “Investor sentiment remains upbeat as 2021 draws to a close with strong domestic and global demand and significant momentum in 2022”.
On the other hand, there are voices who feel that 2022 may not be as encouraging as this year and there are also concerns about the pandemic situation.
Piyush Nagda, Head of Investment Products, Prabhudas Lilladher said that next year will depend a lot on the market sentiment as the uncertainty due to the new COVID variant is still taking a toll on the markets and the economy.
Ricky Kriplani, Lead Sponsor of First Water Capital Fund (AIF), said that 2022 IPO may not be as encouraging as 2021 for the markets, noting that recently some big public issues like Paytm have performed post-listing.
An analysis of the data of the exchanges showed that this year around 63 companies have issued their IPOs to raise Rs 1.2 lakh crore.
This was over Rs 26,611 crore raised by 15 companies through initial share sales throughout 2020 and almost double the previous best of Rs 68,827 crore by 36 companies in 2017.
Among 63 firms, POWERGRID INVIT (Infrastructure Investment Trust) raised Rs 7,735 crore through its IPO, while Brookfield India Real Estate Trust raised Rs 3,800 crore through REIT (Real Estate Investment Trust).
The companies took advantage of the bullish trend in the stock market as well as the excessive liquidity in the system. In addition, new-age technology companies’ IPOs, strong retail participation, and huge listing gains added to the glare on Dalal Street and a gradual recovery path amid the broader economy.
Samir Kaul, MD & CEO, TrustPlutus Wealth (India) said, “The buoyancy in global equity markets, low interest rates and abundant liquidity due to easing monetary policies of global central banks have helped in impressive fund raising through IPOs. “
Sameer Sheth, Partner and Head of Deal Advisory Services, BDO India said that a slew of new-age digital companies listed in 2021 provide an opportunity to invest not only to retail investors, but also to some early stage investors. also provides an opportunity. an exit.
For example, the IPO of food delivery company Zomato was subscribed more than 38 times. Several other technology-led businesses, including One97 Communications (Paytm), FSN E-commerce Ventures (Nayaka) and PB Fintech (PolicyBazaar), took the IPO route to raise funds.
LearnApp.com founder and CEO Prateek Singh said that tech companies now want to expand globally, for which they need capital and this capital is being raised through IPO.
The biggest IPO was One97 Communications with an issue size of Rs 18,300 crore, followed by Zomato with over Rs 9,300 crore. The average size of the issue this year was Rs 1,884 crore.
IPOs of over a dozen companies including Data Patterns (India) Ltd., Tega Industries, Go Fashion (India) Ltd. Latent View Analytics, MTAR Technologies, Devyani International, Rolex Rings, Tatva Chintan Pharma Chem and Nazra Technologies received over 100 subscriptions Is. Times.
The year witnessed a great response from retail investors and the average number of applications from retail stood at 14.36 lakhs, as against 12.77 lakhs in 2020 and 4.05 lakhs in 2019.
In 2021 too, most IPOs opened with a premium over the issue price, indicating a strong investor appetite.
Paras Defense & Space Technologies, Clean Science & Technology, Macrotech Developers, Lakshmi Organic Industries, MTAR Technologies, Easy Trip Planners, all listed this year, are trading above their issue price, in the range of 156-292 per cent. Giving smart returns. Percentage, since listing.
“Due to the vibrancy in both private and public markets, the game of investing on the private side and exiting on the public side has increased, as can be seen with PE-backed IPOs (over 70 per cent) in the recent past. “This year the IPO has been backed by PE,” said Satyen Shah, MD and head of investment banking at Edelweiss Financial Services.
Eklavya, founder of trading platform RecourClub in 2022, said that as long as central bankers maintain a lenient stance, the valuation of the public equity market will remain firm which will provide confidence to the IPO market. PTI SP Ram