The primary issue market has hit an all-time high with 63 corporates raising Rs 1,18,704 crore through main-board initial public offerings (IPOs) so far in 2021, which is nearly 4.5 times more than the Rs 26,613 crore raised through 15 issues in 2020 and almost double of the previous best of Rs 68,827 crore in 2017, according to a report.
Pranav Haldea, managing director of Prime Database Group, said the IPO frenzy was driven by new-age loss-making technology start-ups along with strong retail participation, and the resultant massive listing gains were the key highlights of the year. Another highlight was only 51 per cent or Rs 1,03,621 crore of the total Rs 2,02,009 crore was fresh capital raising and the remaining Rs 98,388 crore were offers for sale.
Overall, public equity fundraising crossed the Rs 2-lakh-crore mark at Rs 2,02,009 crore in 2021 so far, which is higher than the previous high of Rs 1,76,914 crore in 2020, according to the report by Prime Database.
Haldea said the largest main-board IPOs were the One97 Communications (Paytm) issue of Rs 18,300 crore, followed by delivery app Zomato at over Rs 9,300 crore. The average issue size was a high Rs 1,884 crore this year.
Of the 59 issues for which data is available now, 36 received more than 10 times oversubscription, of which six were more than 100 times, while eight were oversubscribed by more than three times. The balance 15 were oversubscribed 1-3 times.
The biggest hallmark of the year was the massive retail response as the average retail applications stood at 14.36 lakh, in comparison to 12.77 lakh in 2020 and 4.05 lakh in 2019. The highest number of retail applications was for Glenmark Life Sciences (33.95 lakh) followed by Devyani International (32.67 lakh) and Latent View (31.87 lakh).
This had the amount of shares applied for by retail at a huge 135 per cent of the IPO mobilisation (156 per cent in 2020). However, the total allocation to retail was only Rs 24,292 crore or just 20 per cent of the total IPO mobilisation, down from 32 per cent in 2020.
Haldea added that IPO success was further buoyed by strong listing performance. Of the 58 issues, 34 gave a return of over 10 per cent (based on the closing price on listing date).
Sigachi Industries gave the highest return of 270 per cent, followed by Paras Defence (185 per cent) and Latent View (148 per cent). While the average listing gain was 32 per cent, compared to 44 per cent in 2020 and 19 per cent in 2019. However, as much as 40 of the 58 issues are trading above the issue price as of December 22.