How public equity fundraising more than halved in 2022 but one segment boomed

Stock markets

by 5paisa Research Team Last Updated: Jan 04, 2023 - 12:20 pm 41.1k Views

Overall public equity fundraising in India sank in the calendar year 2022 as initial public offerings (IPOs) on the main board declined sharply. And the decline would have been even more pronounced had it not been for the face saviour from a high-profile but poor public listing of insurance behemoth LIC.

Around 40 Indian companies raised Rs 59,412 crore through main board IPOs last year, compared with 63 companies that went public raising Rs 1,18,723 crore, an all-time high, in 2021, according to, which tracks the primary capital market.

As much as Rs 20,557 crore, or a little over a third of the total amount raised in 2022, was by LIC alone.

At the same time, the total public equity fundraising skid 55% to Rs 90,995 crore from Rs 2,02,048 crore in 2021. This includes IPOs on SME exchanges, offer for sale (OFS), follow-on public offers (FPOs) and rights issues by existing listed companies, qualified institutional placement (QIPs) besides infrastructure and real estate investment trusts (InvIT, REIT).

OFS through stock exchanges, representing dilution of promoters’ holdings, also halved last year to just Rs 11,269 crore. Of this, the government’s divestment accounted for Rs 9,646 crore, or 86% of the overall amount. The largest OFS was that of Axis Bank (Rs 3,876 crore). Overall, OFS accounted for 12% of the year’s public equity markets mobilization.

FPOs, which have clearly lost favour as a fundraising instrument, saw a new issue, that of Ruchi Soya Industries, mobilizing Rs 4,300 crore. This is only the second FPO in the last eight years and depicts how companies now look at other modes of funding.

QIPs also slid to just 14 companies mobilizing Rs 11,743 crore during the calendar year, down by almost three-fourth from Rs 41,997 crore raised in 2021. The largest QIP of 2022 was from Lodha Group company Macrotech Developers raising Rs 3,547 crore, accounting for close to a third of the total.

In general, QIPs were dominated by real estate, hotels, resorts, restaurants and tourism and financial services companies with these sectors accounting for 88% or Rs 10,289 crore of the overall amount. In addition, there was one QIP of an InvIT of National Highways Infra Trust of Rs 1,216 crore.

InvITs and REITs attracted just Rs 1,166 crore compared to Rs 17,641 crore in 2021.

Mobilisation of resources through rights issues, stood at just Rs 4,053 crore in the calendar year 2022, down 85% from 2021. The largest rights issue of 2022 was from Suzlon Energy raising Rs 1,200 crore, accounting for close to a third of the total money mobilised via the instrument.

By volumes, the year witnessed 10 companies using the rights route in comparison to 11 companies in 2021. In addition, there was one rights issue of an InvIT (Data Infrastructure Trust).

Of the total equity mobilisation, fresh capital amount was Rs 34,259 crore or 38% while the remaining Rs 56,736 crore was pocketed by selling shareholders.

Only 14 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 Rs 7,821 crore accounted for 13% of the total IPO amount. Offers for sale by private promoters at Rs 8,623 crore accounted for 15% while offers for sale by the government accounted for 35% of the IPO amount.

The outlier

Amidst the gloomy scenario for the public market, one segment stood as an outlier. SME IPOs surged with 109 issues collecting a total of Rs 1,874 crore in comparison to 59 IPOs in 2021 that attracted Rs 746 crore. The largest SME IPO was of Rachana Infrastructure (Rs 72 crore). One company (DJ Mediaprint & Logistics) also mobilized Rs 14 crore through SME FPO.

On the main board, the largest IPO of 2022, which was also the largest Indian IPO ever, was from Life Insurance Corp. of India. This was followed by Delhivery (Rs 5,235 crore) and Adani Wilmar (Rs 3,600 crore). As many as 17 out of the 40 IPOs, or nearly half, came in the last two months of the year alone, which shows the volatile conditions prevalent through most of the year which are not conducive for IPO activity.

Delhivery was the only new-age technology company floating IPO last year compared to seven in 2021, indicating how investor concerns about valuations prompted many others to stay out of the ring and public scrutiny in the short term.

IPO response was muted by moderate listing performance. Average listing gain (based on closing price on listing date) fell to 10%, in comparison to 32.19% in 2021 and 43.82% in 2020. Of the 38 companies that listed in 2022 (two floated issues but await listing), 17 gave a return of over 10%. DCX Systems gave a stupendous return of 49% followed by Harsha Engineers and Hariom Pipe Industries (47% each). One third of the IPOs were trading below the issue price.

Outlook for 2023

Year 2022 saw 85 companies filing their offer document with SEBI for approval, in comparison to 128 in 2021. On the other hand, 27 companies looking to raise nearly Rs 37,000 crore let their approval lapse last year and seven companies looking to raise Rs 4,200 crore withdrew their offer document.

The pipeline, however, continues to remain strong. As many as 54 companies are sitting with SEBI approval to raise as much as Rs 84,000 crore or over $10 billion. Another 33 companies are looking to raise about Rs 57,000 crore and are awaiting SEBI approval.

Out of these 87 companies, eight are new-age tech companies, looking to raise roughly Rs 29,000 crore.

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