Record Fundraising via IPOs in India: A Landmark Year for 2024
In a remarkable display of economic resilience and investor confidence, India’s Initial Public Offerings (IPOs) achieved a historic milestone in 2024, raising an astounding ₹1.6 lakh crore. This surge in fundraising can be attributed to a combination of robust economic growth, favorable market conditions, and significant improvements in the regulatory framework. As companies gear up for the upcoming year, the IPO pipeline promises even greater opportunities for both issuers and investors.
A Year of Unprecedented Confidence
The year 2024 was not just a testament to the confidence of issuers but also highlighted the eagerness of investors to capitalize on listing-day gains. The IPO market saw a diverse range of companies, from large corporations to small and medium enterprises, tapping into this lucrative funding avenue. The average issue size increased dramatically, rising from ₹867 crore in 2023 to over ₹1,700 crore in 2024, indicating a growing appetite for larger capital raises.
Among the standout events of the year was Hyundai Motor India’s IPO, which became the largest in the country’s history, raising ₹27,870 crore. This landmark offering set the tone for a year filled with significant public issues, with December alone witnessing at least 15 IPO launches.
Factors Driving IPO Momentum
Several factors contributed to the vibrant IPO landscape in 2024. V Prashant Rao, Director & Head of ECM at Anand Rathi Advisors, noted that rising retail participation, strong domestic inflows, and active involvement from foreign portfolio investors (FPIs) played crucial roles. Despite FPIs being net sellers in the secondary market, their participation in IPOs remained robust. Additionally, increased private capital expenditure and the government’s strategic focus on infrastructure development laid a solid foundation for fundraising momentum.
Market analysts predict that this momentum will only accelerate in 2025, with expectations of surpassing the record figures of 2024. Munish Aggarwal, Managing Director and Head of Equity Capital Markets at Equirus, anticipates that issuance activity could cross ₹2.5 lakh crore, supported by a healthy pipeline of IPOs in various stages of approval.
A Diverse IPO Pipeline for 2025
The upcoming year is set to feature several major offerings, including HDB Financial Services’ proposed ₹12,500 crore issue, LG Electronics India’s ₹15,000 crore public float, and Hexaware Technologies’ ₹9,950 crore offering. The diversity of companies entering the market reflects a broad-based interest in public offerings, catering to various investor profiles.
In 2024, a total of 90 maiden public issues were launched, collectively raising ₹1.6 lakh crore. This figure starkly contrasts with the ₹49,436 crore raised by 57 firms through IPOs in 2023, showcasing the remarkable growth in investor participation and market enthusiasm.
The Rise of SMEs in the IPO Market
The resurgence in IPO activity was not limited to large corporations; the small and medium enterprise (SME) segment also experienced significant growth. A record 238 SMEs raised ₹8,700 crore in 2024, nearly doubling the ₹4,686 crore raised in the previous year. This trend reflects increasing interest in SME public offerings, although it comes with heightened risks for retail investors.
In response to the growing activity in the SME segment, the Securities and Exchange Board of India (SEBI) introduced stricter regulatory frameworks to protect smaller investors. These measures include profitability requirements, caps on the offer-for-sale component, and a "draw of lots" system for non-institutional investors.
Economic Stability and Investor Confidence
Experts attribute the robust IPO activity in 2024 to a stable economic environment, policy continuity at the central government level, and broad-based economic growth. Pranjal Srivastava, Partner-Investment Banking at Centrum Capital, emphasized that these factors have encouraged companies and investors to raise funds. Additionally, foreign portfolio investors have been significant buyers, particularly in larger IPOs.
The resurgence of manufacturing and increased private capital expenditure have also played pivotal roles in driving IPO activity. Companies are increasingly looking to diversify their funding sources, shifting from debt-heavy models to equity, which ensures stronger balance sheets and reduced leverage.
Notable IPO Performances and Investor Demand
Among the largest main-board IPOs of the year, Hyundai Motor India led the pack, followed by Swiggy (₹11,327 crore), NTPC Green Energy (₹10,000 crore), Bajaj Housing Finance (₹6,560 crore), and Ola Electric Mobility (₹6,145 crore). The diversity of companies accessing the capital markets was further illustrated by Vibhor Steel Tubes, which launched the smallest IPO, raising just ₹72 crore.
The subscription ratios for IPOs in 2024 were exceptionally high, with Vibhor Steel Tubes seeing an impressive subscription of 320 times. Other offerings, such as KRN Heat Exchanger and Refrigeration, and Manba Finance, were each subscribed over 200 times. This strong demand translated into substantial listing gains, with over 60 companies delivering positive returns on their debut day.
Conclusion
The IPO landscape in India has witnessed a remarkable transformation in 2024, characterized by record fundraising, increased participation from various sectors, and a promising outlook for the future. As companies continue to seek public funding for expansion and growth, the Indian IPO market is poised for further evolution, driven by investor enthusiasm and a favorable economic environment. With a robust pipeline for 2025, the stage is set for another landmark year in the world of IPOs.