IPO fundraising doubles to ₹51,365 cr in H1 FY25, QIP triples to ₹66,225 cr

Fund raising through initial public offers (IPOs) witnessed substantial growth in the first half of the financial year 2024-25, with 40 companies raising ₹51,365 crore via mainboard offerings. This is 95% higher than the ₹26,311 crore mobilised by 31 IPOs in the same period in 2023-24, as per the data from PRIME Database.

Going ahead, the pipeline is huge, with 26 companies proposing to raise ₹72,000 crore are presently holding SEBI approval while another 55 companies looking to raise about ₹89,000 crore are awaiting SEBI approval.

In the H1 FY25, the companies raised ₹66,225 crore through qualified institutional placement (QIP), which is 195% higher than ₹22,443 crore raised in the corresponding period last year.

The fund raising through QIP contributed to a significant share of the overall public equity fundraising of ₹1,56,947 crore, an increase of 102% from ₹77,744 crore raised in the first half of 2023-24, says Pranav Haldea, Managing Director, PRIME Database Group.

22 main board IPOs launched in last 2 months

The primary market saw a surge in momentum in the last two months, with 22 out of the 40 IPOs coming in August and September. The largest IPO in the first half of 2024-25 was from Bajaj Housing Finance (₹6,560 crore), followed by Ola Electric (₹6,146 crore), and Bharti Hexacom (₹4,275 crore). At the other end, the smallest IPO was from Kronox Lab raising just ₹130 crore. The average deal size was ₹1,284 crore, up from ₹849 crore in the same period last year. Among sector, the highest mobilisation was from the housing finance sector at ₹9,560 crore or 19% of the total issue amount.

According to Haldea, new age technology companies (NATCs) made a comeback after 2 quiet years with 5 IPOs (Awfis, Digit Insurance, Firstcry, Ixigo and Unicommerce) raising ₹8,424 crore.

Strong listing boosted IPO response

The data showed that the overall response from the public was excellent, primarily driven by strong listing performance. Of the 38 IPOs for which data is available presently, 35 IPOs received a mega response of more than 10 times (of which 17 IPOs more than 50 times) while 2 IPOs were oversubscribed by more than 3 times. The balance 1 IPO was oversubscribed between 1 to 3 times.

In comparison to the first half of 2023-24, the response of retail investors increased tremendously. The average number of applications from retail more than doubled to 20.91 lakh in the first half of 2023-24, in comparison to 9.67 lakh in the same period last year. The highest number of applications from retail were received by Bajaj Housing Finance (58.66 lakhs) followed by Arkade Developers (45.37 lakhs) and Northern Arc (45.13 lakhs).

The amount of shares applied for by retail by value of ₹1.58 lakh crore was 211% higher than the total IPO mobilisation (in comparison to being 124% higher in 2023-24) again showing a much higher level of enthusiasm from retail during the period. The total allocation to retail, however, was only ₹11,976 crore which was 24% of the total IPO mobilisation (slightly down from 25% in 2023-24).

According to Haldea, “IPO response was further buoyed by strong listing performance. Average listing gain (based on closing price on listing date) increased to 34.28%, in comparison to 28.65% in the first half of 2023-24.”

Of the 38 IPOs which have got listed thus far, 30 gave a return of over 10%. Bajaj Housing Finance gave a stupendous return of 136% on listing day followed by Unicommerce Esolutions (94%) and Premier Energies (87%). 30 of the 38 IPOs are trading above the issue price (closing price of 30th September, 2024). The average gain of the 38 IPOs till 30th September 2024 has been a huge 41.80%, he explains.

Only 11 out of the 40 IPOs that hit the market had a prior PE/VC investor who sold shares in the IPO. Offers for sale by such PE/VC investors at ₹6,730 crore accounted for 13% of the total IPO amount. Offers for sale by private promoters at ₹12,201 crore accounted for another 24% of the IPO amount. On the other hand, the amount of fresh capital raised in IPOs in the first half of 2024-25 was ₹25,053 crore or 49% of the total amount. 20% of the amount raised through fresh capital was for Capital Enhancement/Working Capital followed by Retirement of Debt (19%), Investment In Subsidiary/Joint Venture/Associate Companies (16%), General Corporate Purpose (14%) and Expansion/New Project/Plant & Machinery (13%).

Anchor investors collectively subscribed to 36% of the total public issue amount. FPIs played a slightly more dominant role than mutual funds as anchor investors with their subscription amounting to 16% of the issue amount with Mutual Funds at 14 percent.

Qualified institutional buyers (including anchors investors) as a whole subscribed to 59% of the total public issue amount. FPIs, on an overall basis, as anchors and QIB, subscribed to 26% of the issue amount in comparison to Mutual Funds at 18%.

According to Haldea, investor enthusiasm can be gauged from the fact that, across categories, the average oversubscription stood at 53.72 times, in comparison to 31.25 times in the same period last year. Average retail oversubscription stood at 33.02 times in comparison to 28.27 times last year.

The first half of 2024-25 saw huge 84 companies filing their offer documents with SEBI for approval (in comparison to 40 in the first half of 2023-24). On the other hand, in the same period, 3 companies looking to raise nearly ₹7,500 crore let their approval lapse, 4 companies looking to raise ₹13,450 crore withdrew their offer document and SEBI returned the offer document of a further 8 companies looking to raise ₹15,500 crore.

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