Fundraising via IPOs in India: A Landmark Year in 2024
The Indian Initial Public Offering (IPO) market has witnessed a remarkable resurgence in 2024, achieving a record fundraising milestone of Rs 1.6 lakh crore. This unprecedented growth can be attributed to a combination of robust economic expansion, favorable market conditions, and significant improvements in the regulatory framework. As companies continue to tap into the IPO route, the outlook for the upcoming year appears even more promising.
A Year of Confidence and Growth
The year 2024 not only showcased the confidence of issuers but also highlighted the eagerness of investors to capitalize on listing-day gains and support companies with strong long-term growth potential. A standout moment was the historic IPO of Hyundai Motor India, which raised an astounding Rs 27,870 crore, marking it as the largest IPO in the country’s history. This landmark event set the tone for a year filled with diverse offerings from companies across various market capitalizations—large, mid, and small.
Rising Average Issue Sizes
The average issue size in 2024 saw a significant increase, rising from Rs 867 crore in 2023 to over Rs 1,700 crore. This upward trend reflects the growing confidence among companies to raise substantial funds through public offerings. The vibrancy of the IPO market was particularly evident in December, which alone witnessed at least 15 launches, underscoring the momentum building towards the end of the year.
Factors Driving the IPO Boom
Several factors contributed to this exceptional fundraising momentum. V Prashant Rao, Director & Head – ECM, Investment Banking at Anand Rathi Advisors, noted that rising retail participation, strong domestic inflows, and active involvement from Foreign Portfolio Investors (FPIs) have collectively laid a robust foundation for this growth. Despite being net sellers in the secondary market, FPIs have played a crucial role in larger IPOs, reflecting a strategic focus on infrastructure and key sectors by the government.
Promising Outlook for 2025
Market analysts are optimistic that the fundraising momentum will continue to accelerate in 2025, potentially surpassing the record figures achieved in 2024. Munish Aggarwal, Managing Director and Head of Equity Capital Markets at Equirus, anticipates that issuance activity could exceed Rs 2.5 lakh crore, based on the 75 IPO documents currently at various stages of approval and marketing.
Noteworthy Upcoming Offerings
The IPO pipeline for 2025 is set to feature several major offerings, including HDB Financial Services’ proposed Rs 12,500 crore issue, LG Electronics India’s Rs 15,000 crore public float, and Hexaware Technologies’ Rs 9,950 crore offering. These upcoming IPOs are expected to attract significant investor interest, further fueling the momentum in the capital markets.
A Record Year for Maiden Public Issues
In 2024, a total of 90 maiden public issues were launched, collectively raising Rs 1.6 lakh crore. This figure far exceeded the Rs 49,436 crore garnered by 57 firms through IPOs in 2023. The resurgence in activity also extended to the Small and Medium Enterprises (SME) segment, where a record 238 SMEs raised Rs 8,700 crore, nearly doubling the Rs 4,686 crore raised in 2023.
Regulatory Measures for Investor Protection
As the IPO market flourished, the Securities and Exchange Board of India (Sebi) introduced stricter regulatory frameworks to safeguard retail investors. These measures included profitability requirements, a cap on the offer-for-sale (OFS) component, and a "draw of lots" system for non-institutional investors (NIIs). Such initiatives aim to mitigate risks associated with SME public offerings, which, despite their potential, come with heightened risks for retail 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 both companies and investors to raise funds. Additionally, the resurgence of manufacturing and increased private capital expenditure have driven companies to seek public funding for expansion and modernization.
Highlights of the Year’s Largest IPOs
Among the largest main-board IPOs of the year, Hyundai Motor India led the pack, followed by notable offerings from Swiggy (Rs 11,327 crore), NTPC Green Energy (Rs 10,000 crore), Bajaj Housing Finance (Rs 6,560 crore), and Ola Electric Mobility (Rs 6,145 crore). In contrast, Vibhor Steel Tubes launched the smallest IPO, raising just Rs 72 crore, showcasing the diversity of companies accessing the capital markets.
Exceptional Subscription Ratios and Listing Gains
The year also saw exceptionally high IPO subscription ratios, with Vibhor Steel Tubes experiencing 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. Notably, Vibhor Steel Tubes, BLS E-Services, Bajaj Housing Finance, and KRN Heat Exchanger all delivered gains exceeding 100%, reflecting robust investor enthusiasm.
Record-Breaking Equity Market Performance
The Indian equity markets also experienced record-breaking performances, with the NSE Nifty 50 reaching an all-time high of 26,216 points on September 27 and the BSE Sensex peaking at 85,836 points on September 26. These milestones were supported by the country’s strong economic growth outlook, further enhancing investor sentiment.
Conclusion
The IPO landscape in India has undergone a transformative year in 2024, characterized by record fundraising, increased participation from various investor segments, and a promising outlook for the future. As companies continue to leverage the capital markets for growth and expansion, the Indian IPO market is poised for even greater achievements in the coming years. With a solid foundation laid in 2024, the stage is set for an exciting 2025, where innovation and investment will continue to drive the economy forward.