Fresh issue portion in IPOs at a decade low on high private equity exits

The next capex cycle may turn the tide, say experts

Initial public offerings (IPOs) this year resulted in minimal fresh capital formation. Though funds raised through IPOs more than doubled in 2020, most of the money was used to provide an exit to existing shareholders, promoters, and private equity (PE) investors.

Of the Rs 26,611 crore raised through IPOs in 2020, the fresh issue portion was a mere Rs 3,531 crore, or 13 per cent — the lowest in 10 years.

Since 2017, three-fourths of IPO fundraises have comprised secondary share sales. Experts said most companies making their debuts these days are asset-lite businesses backed by PE investors.

 “We have seen maturing of