Equity fundraising activity in India shrank this year even as it expanded globally. A recent report by market daily Business Standard stated that so far in 2023, funds raised through equity capital markets (ECM) stood at $7.7 billion, down 15 percent from the same period last year. In comparison, global ECM mobilisation stood at $234.8 billion, up 19 percent, it added, quoting data from Refinitiv.
The ECM activity comprises of all kinds of equity fundraising, such as initial public offerings (IPOs), follow-on share sales and block trades.
The report also highlighted that the funds raised through IPOs so far this year stood at $0.9 billion, down 83 percent YoY. Meanwhile, the fundraising through IPOs also declined globally this year to $48.2 billion, down 26 percent over the same period last year, it further noted.
About $6.8 billion was raised through follow-on offers, up 74 percent YoY, whereas, globally, it stood at $145.8 billion, up 37 percent YoY, mentioned the report.
"Bankers see a tumultuous Indian market as the reason for the decline in IPO activity. The Indian markets corrected nearly 10 percent between December and March due to a combination of various factors - rate hike fears, short-seller Hindenburg’s report alleging irregularities in the Adani Group and the banking crisis in the US. As a result, the equity markets were volatile and issuers were circumspect about raising funds," explained the report.
Investment bankers also told BS that a mismatch between pricing aspirations by promoters and the valuations investors sought also stalled the listing plans of some companies during the first half.
They further pointed out that a company going public is a significant milestone for it and the promoters would want market conditions to be propitious when they launch an IPO. Many companies prefer to wait for the right market conditions to launch their deals.
On follow-up fundraises, bankers explained that the spurt was due to the redemption by private equity (PE) players and promoters.
