IPO market likely to stay bullish in June quarter, Covid to weigh: EY

India had 22 IPOs worth $2.6 bn in Q1 of Calendar 2021 versus 12 IPOs at the same time last year, was ranked ninth globally on number of offerings for the quarter

The prospects for the initial public offering (IPO) market remain bullish for the June quarter, estimates consultancy firm EY.

“We are witnessing high momentum in the Indian capital markets. Significant amount of activity is driven by huge dry powder awaiting investment and companies exploring a listing in India or overseas. The markets continue to reward companies with robust, scalable and technology-led business models,” said Sandip Khetan, Partner and National Leader, Financial Accounting Advisory Services (FAAS), EY India said,

India recorded 22 IPOs worth $2.6 billion in the first quarter of Calendar 2021 versus 12 IPOs at the same time last year. India ranked ninth globally on the number of offerings for the quarter.

Consumer products and retail, diversified industrial products, automotive and transportation were the most active sectors.

EY observed that the deal making pipeline remained strong with close to two dozen companies filing their offer document with market regulator Sebi. It said a further 30 private equity backed companies are planning exits and infrastructure investment trusts (InvITs) worth $5 billion looking to tap the market.

EY said there are reasons to be cautions in the near-term “given the slow start to vaccinations in India relative to the size of the population, renewed spike in Covid-19 infections with the second wave and threats from new variants of the virus.”

In terms of global trends, the first quarter of 2021 was the best-performing first quarter by deal numbers and proceeds in the last 20 years. Over $105 billion was raised through 430 IPOs globally as per EY. The IPO rally also includes special purpose acquisition company (SPAC) IPOs.

Around 40 per cent of the proceeds were from the US market alone. Over 300 SPAC IPOs globally raised $95 billion during the quarter—exceeding entire 2020 tally.

Traditionally, the first quarter of a calendar is a slow quarter but this year has managed to buck that trend, EY said.