IPO mart on song in '21 as cos mop up `1.35 trn

Mumbai: India's primary market witnessed a record-breaking season in the current calendar year 2021, as a total of Rs1.35 lakh crore (Rs1,35,000 crore) was raised by 65 companies through the initial public offering (IPO) route, Kotak Investment Banking said in a media roundtable held on Tuesday. The money raised in the current year is the highest in the history of the Indian capital market.

V Jayasankar, wholetime director, Kotak Mahindra Capital Company, said: "The IPO momentum is likely to continue in CY22 which will be dominated by resilient sectors such as New Age Tech, FIG, Healthcare, Consumer, Real Estate and Specialty Chemicals. With an IPO pipeline in place of $15 billion filed with Sebi and awaiting launch and $11 billion likely to be filed in the near term, we can expect a good share of IPO activity across midcaps and large-caps with several high quality companies looking to list. Fund raising activity will continue to remain buoyant from companies listed in CY20 and CY21 that may come back to raise funds, looking for growth capital, deleveraging to support growth and specific events such as acquisitions, as the world returns to complete normalcy. Overall 2022 would be good for the Indian capital fund raising market."

In CY21, IPO volumes surged over $15 billion ($15.3 billion), the highest ever, as against $4.2 billion in CY20. The average deal size jumped to $288 million ($265 million), while the average IPO size also significantly shot up to Rs2,000 crore. In CY21, 10 companies raised over $500 million compared to three in CY20. Similarly, seven companies raised money between $250 to $500 million through IPO, as against two in the previous year.

In the wake of a massive surge in IPOs, investment banking fee pool for the first time crossed $1 billion in 2021 till date, a 20-25 per cent growth over last year. The rise in fee has been on account of rise in volumes as well as rise in margins.

Kotak, India's top banker in overall ECM deals, helped companies raised $14.46 billion in 35 deals. Since March 2020, Kotak has closed 50 plus ECM transactions worth over $40 billion.

Similarly, mergers and acquisitions activity (M&A) also witnessed significant activity, rising four per cent to $118 billion in the first 11 months as compared to $114 billion in CY20, mainly driven by in bound majority and minority and domestic majority transactions. Inbound majority deals were led by GIC's minority investment in IRB, investments by financial sponsors such as Encube Ethicals, Byju's, Swiggy, & PayTM. Similarly, Billdesk's acquisition by Prosus and other large buy-outs such as Carlyle - Hexaware, Fullerton - Sumitomo drove the momentum in inbound minority deals. Further, transactions involving new-age players were also in action with Tata's acquisition of BigBasket, 1MG and Tejas Networks, Delhivery's acquisition of SpotOn, PharmEasy's acquisition of Thyrocare.

Sourav Mallik, joint managing director, Kotak Investment Bank, said: "We had a great year in terms of total M&A deals in 2021, thanks to a significant show from digital, consumer tech, and SaaS space."