Fund raising via IPOs plunges 60% in 2019

Mumbai: Reflecting the woes of the broader economy, fund raising through IPOs plunged to a low Rs 12,362 crore in 2019, down a full 60 per cent from 2018 when the street mopped up Rs 30,959 crore.

The outgoing year saw only 16 initial public offerings (IPOs) as against 24 in 2018, show the data collated by the premier database on the capital market Prime Database.

That the economy is in bad shape - Q2 GDP has come in at near seven-year-low of 4.5 per cent and there is no sign of any improvement going forward - is clear from the fact that as many 47 companies who got Sebi nod to raise over Rs 51,000 crore through IPOs allowed their same to lapse.

However, driven by offer-for-sale and qualified institutional placements, the street saw 28 per cent growth in overall fund raising at Rs 81,174 crore in 2019, against Rs 63,651 crore in 2018 but this is 49 per cent lower than the all-time high of Rs 1,60,032 crore raised in 2017, says Pranav Haldea, Managing Director at Prime Database Group.

The year 2017 saw 36 IPOs mopping up Rs 67,147 crore, while 2016 saw 26 issues collecting Rs 26,494 crore and Rs 13,614 being raised in 2015 through 15 issues and 2014 being the worst at Rs 1,201 crore from five IPOs, show the data.

The largest IPO in 2019 was from Sterling & Wilson Solar which raised Rs 2,850 crore, while the average issue size was Rs 773 crore. Only three of the 16 IPOs that hit the market had a prior PE/VC investment, a notable change from previous years. OFS by such PE/VC investors stood to Rs 803 crore, accounting for just 6 per cent of IPO amount. OFS by promoters at stood at Rs 7,513 crore, or 61 per cent of total IPO amount.

Seven IPOs got mega responses of over 10 times (IRCTC at 109 times followed by Ujjivan Small Finance Bank 100 times), CSB Bank 48 times, Affle 48 times, Polycab 36 times, Neogen Chemicals 29 times and Indiamart Intermesh 20 times), one issue was oversubscribed by over three times, the balance seven were oversubscribed between one and three times.

But from the listing side, the year was good with IPOs making strong debut. Of the 15 IPOs which got listed, seven gave a return of over 10 per cent, based on closing price on listing date.