Budget 2022: Fund raising via IPOs at decade-high of ₹89,066 cr in 2021

Seventy five companies raised ₹89,066 crore through initial public offerings (IPOs) in first eight months of the current financial year 2022, the highest in any year in the last decade, Economic Survey showed on Monday.

The Economic Survey 2021–22 tabled by finance minister Nirmala Sitharaman in the Lok Sabha today highlighted that India's capital markets witnessed a surge in fund-raising activities during April-November 2021, led by technology startups and unicorns.

In April-November 2020, as many as 75 companies made their debut on the domestic bourses, garnering ₹89,066 crore, as compared to 29 companies raising ₹14,733 crore during the same period last year, registering a massive growth of 504.5% in fund mobilisation.

“The money raised by IPOs has been greater than what has been raised in any year in last decade by a large margin,” the survey noted.

As per the survey report, a total of ₹1.81 lakh crore have been raised through equity issues in various modes, such as public offerings, rights, qualified institutional placements (QIPs), and preferential issues.

The funds raised through rights issues dropped by 62.6% to ₹22,659 crore in April-November 2021, as compared to ₹60,608 crore during corresponding period of previous year. While amount garnered through QIP declined by 52.9% to ₹26,704 crore, amount raised by way of preferential allotment surged by 67.3% to ₹43,004 crore during the period under review.

“The year 2021-22 so far has been an exceptional year for the primary markets with a boom in fundraising through IPOs by many new age companies/tech startups/unicorns. The exuberance associated with the listings manifested in huge oversubscriptions by retail, high net worth individuals (HNIs) and institutional investors and stellar listing gains have pushed more and more companies to tap the markets,” says survey.

The report noted that the strong response by all categories of investors in public listing of companies was reflective of confidence not only in the markets, but also that in corporate sector performance and prospects of the economy in the long run.

Meanwhile, on the debt side, fund worth around ₹3.7 lakh crore have been mobilised through corporate bonds in April-November 2021. The amount raised through public issues in debt doubled as 20 public issues raised ₹9,132 crore during April-November 2021, as compared to 10 issues which raised ₹3,871 crore during the corresponding period of previous year. However, number of issues and amount garnered through private placement dropped as ₹3.6 lakh crore was raised through 851 issues during April-November 2021, as compared to ₹4.9 lakh crore collected through 1,299 issues in the same period last year.

“Overall, debt mobilisation slowed, and this contrast with equity market suggest an increased appetite for risk among investors,” says the Economic Survey report.

“In addition to equity and debt, corporates are also diversifying into a large number of new instruments such as hybrids & convertibles, Real Estate Investment Trusts (REITs), Infrastructure Investment Trusts (InvITs) etc. Resource mobilisation by InvITs was ₹15,506 crore in April-November 2021,” it added.

The current year witnessed a flurry of IPOs, but the striking part of this story was the dominance of new-age internet companies. The list include Paytm (₹18,300 crore), Zomato (₹9,375 crore), Nykaa (₹5,352 crore), Easytrip (₹510 crore), CarTrade (₹2,998 crore), PB Fintech (₹5,625 crore) and Nazara Technologies (₹583 crore).