IPOs: Record Rs 32,000 Crore Raised in 1st Half

This year's tally is the second best ever after 2022 when 16 firms raised Rs 40,311 crore, led by LIC's biggest-ever IPO.

It is not just the secondary market that is setting new records, the primary market is also buzzing with energy.

The three initial public offerings (IPOs) closing this week will mark the best first half for the primary markets in 17 years.

During the first half, 37 companies -- from diverse sectors like co-working space, furniture retailing, and online ticket booking -- have been able to tap the market to raise almost Rs 32,000 crore (Rs 320 billion), according to data provided by PRIME Database.

In 2007 -- the peak of the bull market -- 54 companies had raised Rs 20,833 crore (Rs 208.33 billion).

In terms of the quantum of funds raised, this year's tally is the second best ever after 2022 when 16 firms raised Rs 40,311 crore (Rs 403.11 billion), led by the biggest-ever IPO of State-owned Life Insurance Corporation of India.

If one excludes the amount raised by the LIC IPO, this year is the best for the IPO market in terms of the number of issues as well as the amount raised.

Compared to the first half of last year, the funding has jumped four times, underpinned by strong liquidity support from both foreign and domestic investors.

Also, supportive valuations from the secondary market, which provide cues for the primary market, have encouraged new issuers to go public.

Notably, the record deal-making this year is a sharp deviation from past election years, when the IPO markets turned moribund.

In the first half of 2019, only eight firms raised Rs 5,509 crore (Rs 55.09 billion). In 2014, only one issue came during the first six months, and in 2009, two issues raised Rs 302 crore (Rs 3.02 billion).

Unlike previous election years, bankers said there was more certainty regarding the outcome.

"There was never confusion about regime continuity. While the markets were gyrating a little bit, there was no risk to stability at the Centre and policy continuity, which gave issuers the comfort of not wanting to wait for the outcome because the outcome seemed imminent," said Chirag Negandhi, managing director at JM Financial.

Negandhi said there was enough liquidity in the system from domestic institutions, family offices, and high-net-worth individuals (HNIs) to support good issues.

So far this year, domestic mutual funds have pumped more than Rs 1.85 trillion into domestic stocks.

"And even though foreign investors might be net sellers at certain times, they are not short on India. They lap up issues if they see value," said Negandhi.

Among the IPOs, Bharti Hexacom raised the largest amount, Rs 4,275 crore (Rs 42.75 billion), followed by Aadhar Housing Finance (Rs 3,000 crore/Rs 30 billion). The smallest IPO was that of Vibhor Steel Cubes, which raised Rs 72 crore (Rs 720 million).

The average deal size reduced slightly from Rs 896 crore (Rs 8.96 billion) in the first half of 2023 to Rs 859 crore this year.

So far in 2024, the Sensex has gained 6.8 per cent and the Nifty 8.1 per cent.

The broader Nifty Midcap 100 rallied 20 per cent and the Nifty Smallcap 100 20.5 per cent. Newly listed firms have also handsomely rewarded investors.

The BSE IPO index, a gauge tracking newly listed firms, has risen 21.8 per cent this year.

The financial sector dominated, raising Rs 7,879 crore (Rs 78.79 billion), which accounted for a fourth of the total capital raised.

Going forward, bankers said the issues might pause before the Union Budget, but the pipeline remains equally strong for the remaining six months, with some marquee names such as Swiggy, Hyundai India, and Ola looking to hit the market.

Feature Presentation: Ashish Narsale/Rediff.com