The year 2021 was the best IPO year —in terms of proceeds—for India in the last 20 years, said the latest Ernst & Young (EY) Global IPO report.

The year-on-year IPO activity in India increased 156 per cent in numbers to 110 deals in 2021 (from 43 in 2020) and 314 per cent by proceeds to $16.94 billion (from $4.09 billion in 2020), as per the latest report on IPOs from this global professional services firm.

Ample global liquidity, strong earnings and increased retail participation were among the main factors driving IPO markets in India in 2021.

Prashant Singhal, Emerging Markets, Technology, Media, Telecom (TMT) Leader, EY, said, “This year has seen some of the best performances in the Indian IPO market with new-age tech companies leading the way, and good traction also seen in diversified and industrial products, consumer products and retail sectors. Investor sentiment remains upbeat as 2021 comes to a close with strong domestic and global demand and significant momentum going into 2022.”

The EY report also highlighted that in India, there is a strong pipeline for IPOs in 2022. More than 15 companies filed their draft red-herring prospectuses (DRHP) on the Main Markets in Q4 2021 (Oct-Dec), with plans to complete their IPOs in Q1 2022 (Jan-Mar).

Strong domestic and global demand are expected to continue contributing to positive IPO activity. However, there could be headwinds resulting from the lingering pandemic in Europe, together with impact from higher inflation and interest rates in the near to medium term, the report noted.

Several start-ups in India completed their IPOs in H2 2021, opening a new horizon for domestic capital markets. Many companies have also planned an exit, which include key PE-backed and government companies, it added.

In the main markets (i.e., BSE and NSE), there were twenty IPOs in Q4 2021 versus ten IPOs in Q4 2020 and nineteen IPOs in Q3 2021. This represents an increase of 50 per cent compared to Q4 2020, and an increase of 5 per cent compared to Q3 2021.

As regards to SME markets, there were 16 IPOs in Q4 2021 versus nine and 14 IPOs in Q4 2020 and Q3 2021, respectively, representing a increase of 78 per cent and 14 per cent as compared to Q4 2020 and Q3 2021, respectively.

Private unicorns

Meanwhile, a recent Goldman Sachs Research report highlighted that it expects the IPO pipeline in India to remain robust over the next 12-24 months, based on recent announcements from ‘new economy’ unicorns and the firm’s objective framework for estimating new listings. It noted that atleast 150 private firms could potentially list over the next 2-3 years.

Goldman Sachs Research highlighted that new economy private unicorns are finally coming to public markets in India, which now has over 67 unicorns, half of them from Fintech, E-commerce and SaaS.

Goldman Sachs Research has estimated that nearly $400 billion of market capitalisation could be added from new IPOs over the next 2-3 years. India’s market capitalisation could increase from $3.5 trillion currently to over $5 trillion by 2024, making it the 5th largest market by capitalisation, according to Goldman Sachs Research.