The domestic initial public offering (IPO) market saw serious demand in 2021 as investors rushed to grab shares of several companies that went public to raise funds. It has been a record-breaking year in terms of funds raised through IPOs, with as many as 65 companies raising Rs 1.35 lakh crore so far.
There are several other companies that are likely to go public before the year ends, signaling that the IPO rush is far from over.
But will the craze for IPO investments continue in 20220? A brokerage report indicates that the demand for IPOs will remain strong next year, with a slew of new public issues worth Rs 2 lakh crore or $26 billion in the pipeline.
Decoded: Why so many companies are going public in 2021
Kotak Mahindra Capital Company recently said that 2021 witnessed the highest-ever IPO volumes in India and was much higher compared to 2020. It went on to say that the stock market saw more IPOs in 2021 than in the past three years combined both in terms of funds raised and listings.
Next year is going to be no different, according to the brokerage. It said the IPO frenzy will continue next year, adding that it will be dominated by resilient sectors such as new-age tech, healthcare, consumer, realty and specialty chemicals.
The brokerage noted that IPOs worth $15 billion have already been filed with the Securities and Exchange Board of India (Sebi) and issues worth $11 billion are likely to be filed in the near-term by several high-quality companies across large-caps and mid-caps.
V Jayashankar, whole-time director at Kotak Mahindra Capital, said 2022 will be a good year for the capital fundraising market. He went on to say that the brokerage led 19 of the 26 IPOs of over $200 million, helping raise $7.96 billion from 18 issuances.
It may be noted that the average IPO size shot up sharply to Rs 2,000 crore in 2021, with 7 of the 65 companies raising between $250 and $500 million through primary share sales. The IPO market was dominated by digital companies in 2021.
S Ramesh, MD and CEO of Kotak Mahindra Capital, said 2021 has been the year of the retail investor revolution wherein they have turned leaders rather 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,” Ramesh said.