Equity capital market (ECM) activity more than halved in 2022-23 (FY23) in the midst of a sharp spike in volatility due to aggressive monetary tightening by the US Federal Reserve, a report by Business Standard stated. As per the report, the mop-up via initial public offerings (IPOs) dropped 52 percent year-on-year (YoY) to ₹54,344 crore in FY23, compared with a record ₹1.12 lakh crore in 2021-22 (FY22).
It further informed that the funds raised by qualified institutional placements declined 67 percent to ₹9,335 crore. Meanwhile, the funds mobilised via offer for sale and real estate investment trusts/infrastructure investment trusts fell 23 percent and 92 percent, respectively, it highlighted, quoting data from PRIME Database.
Overall, according to the report, the ECM fundraising dropped 56 percent to ₹76,076 crore, from ₹1.74 lakh crore in the previous financial year (FY22).
"About ₹20,557 crore, or 39 percent, of the amount raised in FY23 was by Life Insurance Corporation (LIC) of India alone, without which the IPO fundraising would have been just ₹31,559 crore. The amount raised in FY23 is still the third highest ever in terms of IPO fundraising,” Pranav Haldea, managing director, PRIME Database Group, was quoted as saying in the report.
After LIC, the biggest IPOs were Delhivery ( ₹5,235 crore) and Global Health ( ₹2,206 crore). The average deal size for IPOs was a high ₹1,409 crore, it said.
The IPO activity was sporadic in FY23, with 25 of the 37 IPOs taking place in just three months (May, November, and December), said the report.
“This shows the volatile conditions prevalent through most of the year were not conducive to IPO activity. The fourth quarter of FY23 has seen the lowest amount being raised in nine years,” Haldea added, as per the report.