Indian companies raised record ₹67,147 cr in 2017 through IPOs
companies raised a record ₹67,147 crore in 2017 through initial public offerings (IPOs), with 36 companies, including India’s biggest insurers, going public.
Last year’s fundraising is 89% more than the previous record of ₹37,534 crore reported in 2010, data from primary market tracker Prime Database shows.
Market experts said several factors, including a resilient domestic economy and strong domestic liquidity coming into equities contributed to the buoyant market for IPOs.
“The domestic economy has remained resilient despite several big disruptions including demonetisation and the GST roll-out, and this has buoyed foreign and domestic investor sentiment,” said Sumit Jalan, co-head of India Investment Banking & Capital Markets, Credit Suisse.
“We’ve seen record domestic inflows this year due to equity being viewed as a preferred asset class after some time, aided by higher penetration of formal channels for savings such as asset managers, insurers and wealth managers.”
The supply side too has been vibrant with high-quality companies from a wide variety of sectors coming to the market.
“On the supply side, fairly high quality paper with good sponsor-backing has hit the mar-
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ket. Investors have reacted positively to the mix of new sectors, themes and instruments that have come to the market. Secondly, a large portion of the issuance this year has been in the form of offer for sales (OFS) in the secondary market, as sponsors took advantage of the constructive market environment to monetise their holdings,” Jalan added.
One of the standout features of the IPO run this year has been the number of large-sized IPOs that hit the market. The year witnessed four $1-billion plus IPOs—General Insurance Corp. of India (₹11,175 crore), The New India Assurance Co. Ltd (₹9,466.9 crore), HDFC Standard Life Insurance Co. Ltd (₹8,695 crore) and SBI Life Insurance Co Ltd (₹8,364 crore).
Experts say that more such IPOs will come into the market in 2018. The median size of IPOs has been increasing over the past three years with FY17 median IPO size at ₹880 crore, indicating that the companies tapping capital markets are among the larger well-established firms looking to further grow their businesses, along with providing exits to early stage investors, said Shilpa Kumar, managing director, ICICI Securities.
Given the four billion-dollar IPOs from the insurance sector and other major issuances, the year was dominated by banking, financial services and insurance (BFSI) sector.
The sector is expected to continue to dominate IPO fundraising in 2018, though a couple of other sectors such as auto and real estate too are expected to shine in 2018.