IPO: at Rs 1.19 lakh crore in 2021, the IPO premium breaks all past records

Mumbai: Fundraising through Initial Public Offerings (IPOs) hit an all-time high in 2021. According to data, 63 companies launched their first share sale this year, raising 1.19 lakh crore crore from public investors.

This is nearly 4.5 times higher than the IPO’s fundraising in 2020 and almost double that of 2017, which so far held the record for the highest fundraising, according to data compiled by Prime Database. In 2020, 15 companies raised 26,613 crore on the public market while in 2017, 36 companies raised ₹ 68,827 crore.

Market participants expect this primary market momentum to continue despite some lackluster quotes in the recent past. Currently, 35 companies have received a green light from the Securities and Exchange Board of India (Sebi) to launch IPOs worth 50,000 crore. Another 33 companies have filed their offer documents to raise around 60,000 and are awaiting approval from Sebi. “The year 2021 will be remembered for opening the doors to entries from the technology sector,” said Manan Lahoty, IndusLaw partner. “Even beyond the tech sector, this year has seen a high number of large IPOs in other sectors,”

The year has seen a multitude of IPOs of new age companies. One 97 Communications – the parent company of Paytm – tapped the capital markets to raise 18,300 crore, making it the biggest IPO of the year. Other tech companies, including Zomato and Nykaa, also debuted in 2021.

Market experts predict that IPO demand will continue.

“Rather than seeing it as an outlier in the general market trend, 2021 should be seen as a turning point for the coming decade in Indian capital markets,” said Murtaza Zoomkawala, partner of Saraf & Partners.

However, any unfavorable moment in the secondary market could spoil the IPO party, experts say. In recent weeks, Indian markets have experienced heightened risk aversion due to expensive valuations and the emergence of a new variant of the Covid-19 virus.

“Inflationary concerns can be expected resulting in rate hikes that will reduce the amount of liquidity available, which together with the way the Omicron variant plays out will impact the secondary market and therefore the primary market.” , said Pranav Haldea, Managing Director, Master Database.

Even in terms of overall fundraising, 2021 has been a banner year for the markets. India Inc raised capital of 2.17 lakh crore in the public markets against the previous high of ₹ 1.85 lakh crore in 2020.

Global fundraising includes both debt and stocks such as IPOs, follow-up offers, qualified institutional placements, and bond issues by public and private companies.

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