Initial Public Offering Boom: 75 Companies Mobilise Rs 89,066 Crore Via Public Debuts In April-November 2021

The primary market has seen hectic fundraising activity in April-November 2021, with 75 companies garnering Rs 89,066 crore through their IPOs, much higher than in any year in the last decade, Economic Survey showed on Monday.

Moreover, a flurry of technology startups made their public debuts during the period.

In comparison, 29 companies raised Rs 14,733 crore through initial public offerings (IPOs) during April-November 2020.

"In April-November 2021, IPOs of 75 companies have listed, garnering Rs 89,066 crore, as compared to 29 companies raising Rs 14,733 crore during April-November 2020, indicating stupendous rise of 504.5 per cent in fund mobilisation," the Economic Survey for 2021-22 showed.

The money raised by IPOs has been greater than what has been raised in any year in last decade by a large margin.

The year 2021-22 has been an "exceptional year" for the primary markets with a boom in fundraising through IPO by many new age companies/tech start-ups/unicorns. 

"The exuberance associated with the listings manifested in huge oversubscriptions by retail, High Net worth Individuals (HNIs) and institutional investors and stellar listing gains have pushed more and more companies to tap the markets," it added.

The tremendous response by all categories of investors in IPOs of companies was reflective of not only the confidence in markets, but also that in corporate sector performance and prospects of the economy in the long run.

Overall, during April-November 2021, Rs 1.81 lakh crore has been raised through equity issues through diverse modes -- public offerings, rights issues, Qualified Institutional Placements (QIP) and preferential allotment.

The amount mopped up by way of preferential allotment surged by 67.3 per cent to Rs 43,004 crore during April-November 2021, as compared to same period previous year. 

Funds raised through rights issues, however, declined by 62.6 per cent to Rs 22,659 crore in April-November 2021, as compared to Rs 60,608 crore during the corresponding period of the previous year. 

In addition, though amount raised through QIPs declined by 52.9 per cent to Rs 26,704 crore.

On the debt side, the fund mobilised through corporate bonds was around Rs 3.7 lakh crore in April-November 2021. 

The amount raised through public issues in debt doubled as 20 public issues raised Rs 9,132 crore during April-November 2021, as compared to 10 issues which raised Rs 3,871 crore during the corresponding period of previous year. 

However, number of issues and amount mobilised through private placement slumped as Rs 3.6 lakh crore was raised through 851 issues during April-November 2021, as compared to Rs 4.9 lakh crore collected through 1,299 issues in the same period last year.

Overall, debt mobilisation slowed, and this contrast with equity market suggest an increased appetite for risk among investors.

In addition to equity and debt,  the Survey noted that corporates are also diversifying into a large number of new instruments such as hybrids and convertibles, Real Estate Investment Trusts (REITs), Infrastructure Investment Trusts (InvITs) etc.

Resource mobilisation by InvITs was Rs 15,506 crore in April-November 2021.