IPOs worth Rs 51,000 crore lapsed in 2019 as fund raising hit lowest since 2014

NEW DELHI: Fund raising through initial public offerings hit its lowest level in 2019 since 2014, even as the benchmark equity indices hit record highs and prospective companies, including PE-backed firms, failed to hit the market despite having regulatory nods from market regulator Sebi.

Some 47 companies looking to raise over Rs 51,000 crore allowed their Sebi approvals to lapse thanks to weakness in the broader market, shows a study by PRIME Database suggested. These approvals were valid for one year.

In the SME segment, it was the first year of negative growth in fund mobilisation since inception.

Even a strong secondary market response to the newly-listed stocks in the latter half of the year failed to lift sentiment in the market.

In all, mainboard and SME IPOs moblised Rs 12,982 crore in 2019, a 60.95 per cent drop from Rs 33,246 per cent in the previous year, and the lowest since Rs 1,468 crore raised in 2014.

Out of the total raised amount, 16 mainboard IPOs raised Rs 12,362 crore, down 60.06 per cent from the Rs 30,959 crore raised through 24 IPOs in 2018.

Twelve of these issues had anchor investors, who collectively subscribed to 35 per cent of the total issue size. Domestic institutional investors (DIIs) accounted for 13 per cent of the amount raised while FPIs 22 per cent.

Only three of the 16 IPOs that hit the market had a prior PE/VC investment, a notable change from previous years.

Offers for sale by such PE and VC investors at Rs 803 crore accounted for just six per cent of the total IPO amount raised. Offers for sale by promoters at Rs 7,513 crore accounted for a further 61 per cent.

Among the 16 mainboard issues, seven received strong response, leading to more than 10 times subscriptions. IRCTC put up the best show with 109 times subscription, followed by Ujjivan Small Finance Bank (100 times), CSB Bank (48 times), Affle (48 times), Polycab (36 times), Neogen Chemicals (29 times) and Indiamart Intermesh (20 times).

The seven other issues were oversubscribed between one to three times. Of the 15 IPOs that got listed, seven delivered over 10 per cent listing gains.

Unlike in the previous few years, only two of the 15 IPOs currently trade below issue prices. The remaining 13 trade 21 to 170 per cent above issue prices.

“The recent buoyancy in the secondary market and listing performance of IPOs in last few months have provided some impetus to the primary market,” said Pranav Haldea of PRIME Database. “The IPO pipeline continues to remain strong with 21 companies readying with Sebi approvals to raise nearly Rs 18,700 crore and another 13 companies awaiting Sebi approvals to raise nearly Rs 18,000 crore,” he said.

Meanwhile, 50 SME IPOs raised Rs 621 crore during the year compared with Rs 2,287 crore raised by 141 IPOs in 2018.