As many as 50 companies filed their draft red herring prospectus (DRHP) with the markets regulator Securities and Exchange Board of India (Sebi), in the first half of 2022, a report by Business Standard stated. This is the highest number of filing for IPOs since 2007, the report said quoting data from PRIME Database.
With markets witnessing a massive correction in recent times amid fears of global recession, the IPO markets have also reflected weakness in demand. The report noted that in June, not one company was able to launch its maiden share sale — the first month of an IPO drought since August 2020.
Also, the number of monthly IPO filings has declined from an average of 10 during the first four months of the year to four each in May and June, it added.
“As far as deal launches are concerned, there has been a slowdown. There have been performance issues with some big IPOs that got listed recently. Therefore, many of them will not be keen to look at investing in new IPO opportunities at the moment,” S Venkatraghavan of Equirus Capital told BS.
However, funds raised via fresh issues during the first half of CY22 point to a bullish trend said BS. A record ₹40,311 crore has been raised via maiden share sales, so far, this year -- nearly 50 percent more than that during the same period of last year. But this number is skewed by Life Insurance Corporation (LIC)’s mega ₹20,500-crore offer, it added.
During the second half, Venkatraghavan said the markets may present a window of opportunities for companies to launch their IPOs.
"According to PRIME Database, nearly 50 firms have to launch their IPOs worth over ₹60,000 crore during the second half of 2022 or see their one-year validity period for IPO approvals lapse," BS stated.
Experts say only a handful of these companies may be able to launch their IPOs. Many are already in talks with private equity investors for alternative fundraising opportunities.