Activity in the primary capital markets, is expected to remain subdued in the first couple of quarters in 2023-24, due to market uncertainty and other domestic and global factors, Prime Database said.
The prevailing weakness in the secondary markets that hit initial public offerings in FY23, is likely to persist for sometime, the report said, adding that small sized IPOs could be floated but “it will be a while before we see larger sized deals, especially in light of lack of sustained interest from FPIs.”
The pipeline for the next fiscal year, which starts on Saturday, looked strong with 54 companies having SEBI approval to raise ₹76,189 crore. 19 other companies looking to raise about ₹32,940 crore are awaiting SEBI approval.
Raising of funds via initial public offerings halved in 2022-23 from year ago, due to market volatility, moderate listing gains and investor fatigue, Prime Database said, adding It was still the third highest year for IPO fundraising over the last decade.
A little more than ₹52,000 crore was raised on the mainboard by 37 companies, compared to ₹1.1 lakh core raised year ago by 53 companies. Of the total raised this year, Life Insurance Corporation accounted for ₹20,557 crore.
Spooked by the volatile market conditions several companies decided not to go ahead with their IPOs, such as Fab India and Joyalukkas. Of the 68 companies that filed draft offer documents with SEBI, 37 companies let their approvals lapse during the year, while 12 companies withdrew their offer documents. Together, the last two categories accounted for over ₹62,000 crore worth of potential fundraising.
On an overall basis total funds raised through the issue of equity fell 56 per cent on year in FY23 to ₹76,076 crore.
The average deal size was ₹1,409 crore. As many as 25 out of the 37 IPOs were bunched up in May, November and December,when the markets were the least volatile.
The current quarter that ends on Friday has seen the lowest amount being raised in the last nine years.
Good response to 50% of IPOs
According to Prime Database, the overall response from the public was moderate. Of the 36 IPOs for which data is available, 11 IPOs received a mega response of more than 10 times, while seven IPOs were oversubscribed by more than three times.
The new HNI segment, with subscriptions between ₹2-10 lakh saw an encouraging response with 11 IPOs receiving a response of more than 10 times from this segment.
In comparison to 2021-22, the response of retail investors also moderated, the study showed. The average number of applications from the retail segment dropped to just 5.64 lakh, in comparison to 13.32 lakh in 2021-22 and 12.73 lakh in 2020-21.
Subscriptions to IPOs were also hit by their moderate listing performance, according to Pranav Haldea, Managing Director of Prime Database.
Average listing gains fell to 9.74 per cent, in comparison to 32.59 percent in 2021-22 and 35.68 per cent in 2020-21. Less than half of those that listed gave a return of over 10 per cent.