After the record-breaking IPO rally with as many as 65 issuers collecting a whopping Rs 1.35 trillion so far this year, the market frenzy is set to continue next year with new issues worth over Rs 2 trillion ($26 billion) in the pipeline,
The year 2021 has seen the highest-ever IPO volumes in the country with the volumes surging to $15.3 billion, as against $4.2 billion in 2020. That means the Street saw more IPOs in 2021 than in the year past three years combined, both in the number of listings and amount raised, Kotak Mahindra Capital Company told reporters on Tuesday. And, the IPO frenzy is set to continue next year with $26 billion worth of issues being in the pipeline, the brokerage said. It added that the new issues will be dominated by resilient sectors such as new-age tech, healthcare, consumer, realty and speciality chemicals issues.
While IPOs worth $15 billion have already been filed with the Sebi, issues worth $11 billion are likely to be filed near-term by several high-quality companies across large-caps and mid-caps. This means that IPO fundraising will continue to remain buoyant from companies. V Jayasankar, whole-time director at the brokerage, told reporters that overall, 2022 would be good for the capital fundraising market. He added that the brokerage led 19 of the 26 IPOs of over $200 million helping raise $7.96 billion from 18 issuances.
The average IPO size also shot up significantly to Rs 2,000 crore with seven of the 65 companies raising between $250 million and $500 million through the primary share sales, as against two in the previous year. The issue Street was dominated by digital companies. S Ramesh, MD and CEO of Kotak Mahindra Capital, said the year 2021 has been the year of the retail investor revolution wherein they have turned leaders than being followers.
“While 2021 was huge for IPOs, we expect 2022 to be another good year, nevertheless investors should be cautious and not assume all IPOs to hit the bull’s eye.” On the investment banking fees that i-bankers collected from the busiest capital market year, till date, the fee pool for the first time crossed USD 1 billion, up around 25 per cent growth over 2020.
The rise in fees has been on account of a rise in volumes as well as higher margin and led by the massive surge in initial public offerings (IPOs). Total M&As remain upbeat in 2021, rising four per cent to $118 billion in the first 11 months as compared with $114 billion in 2020, the brokerage said. It added that the deal-making was led by inbound transactions, GIC’s investment in IRB, financials investing in Encube Ethicals, Byju’s, Swiggy, and Paytm, Billdesk being taken over by Prosus and other large buy-outs such as Carlyle-Hexaware, Fullerton-Sumitomo, etc.
The year also saw transactions like Tata’s acquisition of BigBasket, 1MG and Tejas Networks, Delhivery’s acquisition of Spoton, Pharmeasy’s acquisition of Thyrocare. The country saw $58.3 billion of the private equity/ venture capital money flowing into 968 domestic companies, which is nearly 10 times the FPI flows of $4 billion. Also, the total amount invested in 2021 exceeds the combined value of the investment in 2019 and 2020, excluding Reliance Retail and Reliance Jio investments.
The year saw $58.3 billion being invested into 968 companies as against $37.6 billion into 671 firms, including $16.3 billion in Reliance Retail and Jio. Of the investment, $15.9 billion were buyouts, $27.2 billion were minority investments in digital and $4.2 billion were minority investments in enterprise tech companies. And, buyouts contributed to 25 per cent of the total PE deal value since 2018.