IPO activity to pick up pace in 2nd half of 2023: Report

There have been a total of four IPOs in Q1 2023, one higher than the same period of last year. Divgi TorqTransfer Systems was the largest IPO till March, raising about $50 million.

Mankind Pharma’s Rs 4,300 crore initial share sale, the biggest so far this year, has received good response as the issue and was subscribed 15 times at close.

The total fundraising via IPOs during Q1 2023 dropped 89% year-on-year to $107 million, in line with global experience of reduction in issue sizes, according to a report by EY India.

However, India remained top in terms of number of IPOs during Q1, although much of this is attributed to small-ticket IPOs.

The SME segment raised $82 million via 38 IPOs during Q1 2023 as against 31 IPOs in Q1 2022 raising $37 million, which is an increase of 23% in the number of deals and 123% in proceeds raised.

Around 15 companies have filed their DRHPs during the said period as compared to around 10 companies that filed their DRHPs a year earlier. These include companies across various sectors such as consumer, pharmaceuticals, technology and financial services.However, nearly half a dozen companies have withdrawn their IPO filings due to market conditions or the regulator SEBI has returned their offer documents in the last quarter.

While the reason for returning these offer documents varies, the regulator requires the companies to be fully compliant at the time of filing.

“The India IPO market has shown resilience and growth in Q1 2023, despite ongoing global uncertainties and relatively smaller issue size. The market’s strength is a testament to the Indian economy’s potential for growth. We expect IPO momentum to increase in the future, with domestic and international investors playing important roles,” said Veenit Surana, Partner, EY India.

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