The fee collected by investment bankers for managing equity share sales dropped 33.4 percent year-on-year (YoY) to $95 million during the first six months of 2022, a report by Business Standard stated, as sharp correction in the equity markets kept the investors cautious.
The overall equity issuances during the first half (H1) dropped 40 percent to $9.1 billion, the lowest first-half tally since 2016, the BS report said quoting Refinitiv, a markets data provider.
The report noted that a 10 percent fall in the benchmark indices and a sharper cut in the broader market led to a drop in equity issuances, such as qualified institutional placements, rights issues, and block deals, by listed companies.
However, it added that the mop-up through initial public offerings (IPOs), however, hit a record.
"Maiden share sales raised a cumulative $5.2 billion — the highest-ever for the first six months of any calendar year. This was on the back of the IPO of state-owned Life Insurance Corporation (LIC) of India, which alone raised $2.72 billion — 30 percent of the total equity capital market (ECM) proceeds during H1," the report pointed out. It also highlighted that the number of IPOs was 54 percent higher than last year.
Meanwhile, the follow-on offerings, which accounted for 43.4 percent of the overall equity capital markets' (ECM) proceeds, fell 63 percent YoY, added the market daily.
“With uncertainties brought by volatile stock markets, geopolitical tensions, and unfavourable macroeconomic factors, global IPOs witnessed dramatic decline this year after a record level of activity seen in 2021. Most major markets experienced YoY declines — both in proceeds and the number of IPOs. India was one of the few that witnessed an increase in IPO activity. However, with high volatility in the secondary markets and measures to tighten liquidity, Indian IPO activity could be subdued in the months to come,” Elaine Tan, senior analyst, Refinitiv told BS.
In sectoral terms, the financial sector accounted for a bulk of ECM activity, with 34.4 percent market share, however, the issuance by financial companies was 56 percent lower, compared to H1 of 2021, stated the report. It further added that consumer staples was the second-biggest sector in terms of issuance, followed by health care.
