India Dominates Global IPO Market With Record Q1CY23 Figures; Strong IPO pipeline for the second half of CY23

According to a recent report by EY, India has taken the lead in the number of IPOs worldwide in the first quarter of the current calendar year. Despite ongoing global uncertainties, the Indian IPO market has shown resilience and growth, with the total number of IPOs increasing by 33% in Q1CY23 compared to the same period in 2022. Although generated proceeds have fallen by 89% across the main markets the SME segment raised $82 million through 38 IPOs, representing a 123% increase in raised proceeds over the prior year.

The EY report also highlights that the biggest IPO by revenue this year was Divgi TorqTransfer Systems, which raised $50 million. The announcement did not take into account Mankind Pharma’s Rs 4,300 crore IPO which closed on April 27 Thursday. The report also shows that about 15 companies filed their DRHPs in the first quarter of this calendar year, compared to about 10 companies that filed their DRHPs in the last quarter of CY22, indicating a strong pipeline for IPOs in H2CY23 and beyond. These companies come from diverse industries such as consumer goods, pharmaceuticals, technology and financial services.

Adarsh ​​Ranka, Financial Accounting Advisory Services Leader, Partner of an Indian member firm of EY Global, said: “India is a bright spot in the global economic landscape. While IPO activity has remained subdued, companies are using this time to better prepare to launch their IPO early next year (before or after the Indian general election). Veenit Surana, Partner, EY India further explained: “The Indian IPO market has shown resilience and strong growth in Q1 2023 despite ongoing global uncertainties and relatively low issuance volume. The strength of the market is a testament to the growth potential of the Indian economy. We expect the IPO momentum to increase going forward, with domestic and international investors playing an important role.”

Although some companies have withdrawn their IPO filings due to market conditions or regulatory requirements, the report finds that India ranks first globally in terms of number of IPOs in Q1CY23. This is due to the smaller ticket, SME IPOs, as nearly half a dozen larger companies withdrew their IPO filings due to market conditions or regulatory requirements. The regulator (SEBI) returned bid documents last quarter, requiring companies to be fully compliant at the time of filing.

While the IPO market has been tepid, the report expects the market to recover and volatile stock activity to stabilize. The strong pipeline for IPOs in the second half of the year and beyond suggests a brighter outlook for the Indian IPO market, with both domestic and international investors expected to play an important role.