The commission pool of Indian investment banks exceeded $ 1 billion this year, up 25% from a year ago, thanks to the record number of issues to sell shares.
According to Kotak Mahindra Investment Bank, one of India’s largest investment bankers and manager of several equity sales this year, an increase in activity also helped margins improve in the expense pool of investment bank. The year 2021 broke some records including Biggest Issue, total number and size of shows.
In 2021, the total number of IPOs was higher than the last three years taken together, both in terms of the number of companies and the total amount raised. No less than 65 companies have raised 1.35 billion INR ($ 18 billion), a record for the country. The average IPO size has climbed to INR 20 billion.
This year, so far, 10 companies have raised more than $ 500 million compared to three last year. Seven companies raised between $ 250 million and $ 500 million through IPOs, up from two the previous year, according to data compiled by Kotak Mahindra Capital.
One97 Communications, which owns and operates India’s largest digital payments platform under the Paytm brand, raised INR 183 billion in November in India’s largest-ever share sale.
Sentiment among investors and fundraisers has hardly been affected, even after One97 shares fell 27% on their debut and are trading more than 40% below their issue price of 2. 150 INR. At least half a dozen issues have hit the market since then, reflecting bullish sentiment in the market.
The government and the central bank have played their part in strengthening underlying sentiment in the stock markets since March 2020, when the World Health Organization called the Covid-19 outbreak a pandemic.
The Reserve Bank of India, the country’s central bank, has kept interest rates at an all-time high since February 2019 and has kept abundant liquidity in the financial system to help accelerate economic growth. The government has announced billion-dollar production-related incentive plans from the automotive to telecommunications sectors to support economic activities.
“From an IPO perspective, the year was unique in many ways. Institutional and retail investors have greeted the IPOs of new-age technology with great enthusiasm. While 2021 was huge for the IPO fundraising market, we expect 2022 to be another good year. Still, investors should be careful not to assume that all IPOs hit the nail on the head, ”S Ramesh, Managing Director and CEO of Kotak Investment Banking, told Capital.com.
Digital and financial technology companies dominated the scene, a trend seen in other developed markets. The healthcare and pharmaceutical segments followed, attracting major transactions in the face of the global pandemic.
Demand from retail investors meant that some of the IPO issues were fully subscribed within hours of opening, Kotak Mahindra noted.
Kotak Mahindra was a leader in 19 of the 26 primary market shows he helped advise this year. This has raised around $ 15 billion for companies through IPOs.
Private placement of shares with institutional investors and the issuance of share subscription rights have taken a back seat this year. Funds raised from institutional investors through private placements totaled $ 5.6 billion, lower than the $ 11.4 billion recorded last year, while those through rights issuance were $ 3. $ 9 billion, up from $ 8.6 billion a year ago.
Kotak Mahindra predicts that the trend of fundraising through the sale of stocks will continue into the new year, driven by companies in the digital technology, consumer, healthcare, real estate and other sectors. specialty chemicals, among others.
“IPO momentum is expected to continue into 2022, which will be dominated by resilient sectors such as new-age tech, healthcare, consumer, real estate and specialty chemicals. With an instead $ 15 billion IPO pipeline filed with market regulators and awaiting launch and $ 11 billion likely to be deposited in the near term, we can expect a fair share of IPO activity among mid and large caps with several high quality stocks. companies looking to register, ”V Jayasankar, full-time director of Kotak Mahindra Capital, told Capital.com.
India’s state-owned life insurance company, the country’s largest insurer with more than 85% market share, is considering an IPO and has appointed 15 investment bankers for the deal. The company said the size of the offering is “unprecedented”.
Read more: Indian stocks close higher for second day thanks to value purchase
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