India’s IPO Market Soars: A Record-Breaking Year
The Indian primary market has recently witnessed a remarkable surge, highlighted by the successful closure of Swiggy’s ₹11,300 crore public issue and ACME Solar’s ₹2,900 crore share sale. This achievement has propelled the total amount raised from initial public offerings (IPOs) in 2023 to an impressive ₹1.19 lakh crore (approximately $14 billion), surpassing the previous record of ₹1.18 lakh crore set in 2021. This milestone not only underscores the vibrancy of India’s capital markets but also reflects the growing appetite for public investments among domestic and foreign investors alike.
A Global Perspective on IPO Fundraising
According to Refinitiv data, India’s IPO fundraising this year ranks as the second highest globally, trailing only the United States, which has raised $26.3 billion. China follows in third place with $10.7 billion. The robust performance of India’s IPO market can be attributed to a combination of factors, including high valuations in the secondary market and an abundance of liquidity among institutional investors. These elements have fostered a strong demand for public issues, making 2023 a standout year for IPOs.
Strong Demand Amid Market Volatility
V Jayasankar, head of equity capital markets at Kotak Investment Banking, noted that domestic investors are showing robust inflows into primary markets, while foreign investors remain aggressive in the primary market despite selling off shares in the secondary market. This trend is particularly evident in the case of large IPOs like Swiggy, which attracted significant demand from quality anchor investors. This indicates a substantial appetite for IPOs in India, even amid the high volatility that has characterized the secondary market.
Recent IPO Highlights
In October alone, three major IPOs—Swiggy, ACME Solar, and Sagility India—collectively raised ₹16,334 crore. Swiggy’s IPO was oversubscribed 3.59 times, while ACME Solar’s issue saw a subscription rate of 2.74 times. This strong demand is further evidenced by the fact that foreign portfolio investors (FPIs) have invested ₹87,073 crore in the primary market this year, despite selling shares worth ₹96,946 crore in the secondary market.
Record-Breaking IPOs
Last month, Hyundai Motor set a new benchmark by raising ₹27,870 crore through its IPO, which was oversubscribed 2.37 times. This IPO surpassed the previous record held by the Life Insurance Corporation of India (LIC), which raised ₹21,008 crore in May 2022. Other notable IPOs this year include Bajaj Housing, which raised ₹6,560 crore, Ola Electric at ₹6,146 crore, and Afcons Infra, a Shapoorji Pallonji company, which raised ₹5,430 crore. In total, around 20 companies have raised between ₹1,000 crore and ₹4,300 crore each this year.
Encouraging Returns Fueling Investor Interest
The majority of IPOs listed this year have delivered strong returns, which has encouraged investors to commit more funds to the primary market. Investment banker Ravi Sardana emphasized that the success of recent public issues and their favorable returns are likely to sustain the momentum in IPOs. Of the 68 companies that held IPOs this year, 49 are currently trading above their offer price, while only 19 are below that level. Notably, several companies, including Jyoti CNC, Platinum Industries, and Gala Precision Engineering, have seen their stock prices more than double since listing.
Rising Participation from Retail and HNI Investors
The growing interest in IPOs is also reflected in the increasing number of demat accounts in India. As of October 2024, the total number of demat accounts surged to 179 million, marking an increase of 35 million accounts within the calendar year. This growth has contributed to an average monthly addition of 3.5 million accounts, indicating that new categories of retail and high-net-worth investors (HNIs) are flocking to the IPO market.
Conclusion
The successful closure of Swiggy and ACME Solar’s IPOs marks a significant milestone in India’s capital markets, setting the stage for a record-breaking year in fundraising. With strong demand from both domestic and foreign investors, coupled with encouraging returns from recent IPOs, the momentum in India’s primary market is expected to continue. As more investors enter the fray, the landscape of the Indian IPO market is poised for further growth, making it an exciting time for both issuers and investors alike.