Fund-raising by Indian IPOs declining quicker than global peers

May 31, 2023 10:00

The amount of money Indian companies raised from the stock market has fallen faster than their global peers in 2023.Indian companies raised $294 million in the first four months of 2023 (January through April) via initial public offerings (IPOs), according to data from tracker Refinitiv, a part of London Stock Exchange Group.

An IPO is when companies raise money from the public for the first time and list their shares on the stock exchange for trading.

India's IPO mop-up so far in 2023 is 80 per cent lower than the $1.5 billion raised in the corresponding period last year. By comparison, global markets have seen a 36 per cent decline.

Experts attribute global uncertainty and a drop in valuations to the sharp drop in fundraising activity this calendar year.

"Markets are uncertain due to global factors and rise in inflation. Not many wanted to launch their IPOs as they were not getting the right valuations promoters were looking for. While many offer documents got filed, not many issues got launched," says Pranjal Srivastava, partner-equity capital markets (ECM), Centrum Capital.

"Our primary markets don't have the same level of depth or maturity as some of the developed markets. The IPO outlook will improve after the positive reception of some issues," Srivastava adds.

India's share in the amount raised globally has fallen to 0.9 per cent this year. It has averaged close to 2.9 per cent in the previous five years. The share was 5.2 per cent in 2022 -- the highest since 2017's 6.1 per cent.

Some believe ECM activity will bounce back as companies prepare to launch their IPOs.

"India is a bright spot in the global economic landscape. While the IPO activity has remained subdued, companies are using this period to be better prepared for launching their IPO early next year (before or after the general elections)," says Adarsh Ranka, financial accounting advisory services leader, partner, with Indian member firm of EY Global.

-- Anoushka Sawhney and Sundar Sethuraman/Business Standard

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