2023 may set a new record for IPO (Initial Public Offerings)
If year 2021 was a year of bumper IPOs and year 2022 was a disappointment, then year 2023 is expected to be a lot better for IPOs. According to preliminary estimates put out by Prime Data base, the year 2023 could see more than 89 companies hit the IPO street and raising nearly Rs. 1.40 trillion in the process. This would be even better than year 2021 when a total of 63 companies had raised Rs. 1.19 trillion through the IPO route. In comparison, year 2022 has been relatively tepid with 33 companies raising just about Rs. 55,146 crore. Even that was largely dominated by the Rs. 23,000 crore LIC IPO.
According to fund managers, year 2023 could see the return of IPOs for multiple reasons. In comparison to 2021, the valuations are likely to be more moderated. That is likely to reduce the post listing disappointment. Also, with markets at close to their all time highs, alpha is going to be tougher to get in the secondary markets. Hence most fund managers from the local and the global arena could prefer the IPO route to earn that extra punch in their portfolio. This is despite the fact that a number of large sized IPOs of 2021 and 2022 are still trading below their IPO price, even after a long gap of time. As valuations moderate and IPOs become smaller in size, the impact on wealth erosion will also be relatively lesser.
For instance, if you look at the large IPOs of 2021, the likes of Nykaa, Zomato, Paytm, CarTrade and PB Fintech have significantly eroded shareholder wealth. Even if you look at 2022, the shareholder wealth erosion has happened in stocks like LIC and Delhivery, which were the two largest IPOs of the year. In short, the pain has been the most in large sized issues. However, the Rs. 1.40 trillion in 2023 cannot be achieved through small and mid-sized issues alone. There will be a generous share of large sized issues too. In the meanwhile, a number of companies that got the IPO approvals from SEBI have decided to defer their IPO plans for the time being due to rather challenging market conditions.
Several high profile companies have opted out of the IPO queue. For instance, BOAT officially decided to put off the public issue plans for now. Instead, the company has raised $60 million from private investors, which should take care of their immediate funding needs. Even Macleods Pharma has decided to shelve its Rs. 6,000 crore IPO as has PharmEasy due to tight market conditions. Apart from these, Snapdeal has decided to pull the plug on its IPO plans while the high profile Ola Cabs has also decided to put off the IPO plans, despite turning around to profits during the latest year. None of the companies have written off IPO plans, but they are out of the queue for the time being.
Key IPOs expected in year 2023
Here is a list of major IPOs expected to hit the IPO market during the year 2023.
Oravel Stays, better known as OYO Rooms, is planning to launch its IPO of Rs. 8,430 crore in the first half of the year 2023. It still has some regulatory issues to sort out.
Ethnic India retailer, Fabindia, is likely to go ahead with its Rs. 4,000 crore IPO in the year 2023. They are yet to firm up on the exact timing of the IPO, although it would be in 2023.
Aadhar Housing Finance, which is backed by Blackstone, is planning its Rs. 7,300 crore IPO during the year. Its IPO had been stuck in regulatory hassles for a long time.
Mankind Pharma will also bring out its Rs. 5,500 crore IPO in 2023 and could be one of the largest domestic pharma IPO, along with Gland Pharma.
This is just a partial list of IPOs in 2023. However, action is going to be quite strong.
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