IPO boom. Another blockbuster year ahead for IPOs; mop-up to hit ₹2-lakh crore

The IPOs flurry of 2021 is expected to turn into a frenzy in 2022 with the mega LIC offering set to push the overall mop-up via Initial Public Offer to about ₹2-lakh crore this year. This will be significantly higher than the record IPO mop up of ₹1.31-lakh crore by 65 companies in 2021.

The last time there was a robust IPO activity with a mop-up of over ₹50,000 crore was in 2017 when ₹67,000 crore was collected, market watchers said.

Old and new firms line up

The new year will see a good mix of old economy biggies as well as new age Internet-based and technology businesses tapping the primary market, they added.

SEBI has already given approval for some 35 companies to raise about ₹50,000 crore and 33 more are waiting for the regulator’s nod to raise around ₹60,000 crore. Add to this the mega LIC IPO, which could raise anywhere from ₹70,000 crore to ₹1 lakh crore (depending on the valuation and how much equity the government wants to shed), and the current year could well see the primary market setting a new record, the market watchers said.

“While 2021 was huge for the IPO market, we expect 2022 to be another good year. Nevertheless, investors should be cautious and not assume all IPOs will hit the bulls eye. Exercising judgment and right insight will be crucial in terms of outcomes,” said R Ramesh, Managing Director & CEO, Kotak Mahindra Capital Company.

He said that 2021 was unique in many ways especially institutional and retail investors welcoming with great enthusiasm IPOs from new-age tech and SaaS companies. A Kotak Mahindra Capital Company report recently said that 2022 would be dominated by resilient sectors such as new-age tech, healthcare, consumer, realty and specialty chemicals.

The big names

Among the noteworthy public offerings slated to hit the market this year are Life Insurance Corporation, Emcure Pharma (₹5,000 crore), Adani Wilmar (₹4,500 crore), GoAir (₹3,600 crore), Gemini Edibles (₹2,500 crore) and India1 Payments (₹2,000 crore). Speculation is rife that the National Stock Exchange (NSE) will also look at a listing this year through the IPO route and look at a sizable offering of say ₹10,000 crore.

The other companies that have the SEBI approval include ESDS Software, Tracxn Technologies, Fusion Micro Finance, AGS Transact Technologies, Utkarsh Small Finance Bank, Arohan Financial Services, Veda Clinical, VLCC Health Care, ESAF Small Finance Bank, Fincare Small Finance Bank, Sterlite Power Transmission and Prudent Corporate Advisory Services.

Several new age companies such as OYO, Delhivery, Mobikwik, Droom , eMudhra, Snapdeal and PharmEasy are also looking at IPOs this year. Bharat FIH, Waaree Energies, Wellness Forever and Lava International are expected to tap the primary market.

Move from secondary market

The market watchers said that the 2021 trend of foreign portfolio investors selling stocks with high valuations, mainly in the finance sector, to reinvest in the primary market may spillover to retail investors and domestic institutional investors. With capital getting diverted to the primary sector, the secondary market may come under pressure, they added.

It may be recalled that several records were broken in the primary market in 2021. For the first time, two companies — Latent View Analytics and Paras Defence and Space Technologies — saw their IPOs subscribed over 300 times.

Global trend too

Experts pointed out that the IPO frenzy in 2021 was a global phenomenon. In fact, India benefited this. Globally, IPOs raised over $450 billion in 2021, 67 per cent over the previous year. India raised about $17 billion in 2021, the highest in two decades.

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