Economic uncertainty and evolving geopolitical issues have not deterred approximately 17 companies from planning to raise around ₹70,000 crore through initial public offerings (IPOs) in the upcoming two months.
Among the notable IPOs, ICICI AMC aims to raise ₹9,500 crore, followed by Groww with ₹6,000 crore, PhysicsWalla at ₹3,820 crore, WeWork at ₹3,000 crore, Tata Capital at ₹17,000 crore, LG Electronics at ₹11,600 crore, and Canara HSBC Life with ₹2,000 crore.
The recent profitable listings of IPOs and the surplus liquidity in the economy, bolstered by reductions in personal income tax and adjustments to Goods and Services Tax (GST) rates, have enhanced the financial capacity of the average citizen. In addition, the Union Cabinet, led by Prime Minister Narendra Modi, has sanctioned a 3 percent increase in the Dearness Allowance (DA) for Central Government employees and Dearness Relief (DR) for pensioners.
This DA/DR increase, effective July 1, raises the existing rate from 55 percent of basic pay/pension, supporting 49 lakh central government employees and 69 lakh pensioners, at an estimated annual cost of ₹10,084 crore.
The Reserve Bank of India (RBI) has recently proposed increasing the lending limit for investors seeking funding for IPOs from ₹10 lakh to ₹25 lakh, facilitating larger bids from retail investors. This move has encouraged corporations, previously hesitant, to engage actively in the primary markets.
Sachin Jasuja, Head of Equities and Founding Partner at Centricity WealthTech, noted that the increase in bank lending for IPO subscriptions, along with lending against shares rising from ₹20 lakh to ₹1 crore per investor, is intended to attract investors to the formal market and reduce grey market investments ahead of IPOs.
Sunil Subramaniam, CEO of the independent think-tank Sense and Simplicity, attributed the surge in IPO activity to favorable valuations enabling private equity firms and early-stage investors to exit their investments. He also mentioned recent changes by the Securities and Exchange Board of India (SEBI) that have adjusted public float regulations. The initial mandatory public shareholding has been reduced to 2.5 percent for companies with market capitalizations exceeding ₹5 lakh crore, and the timeframe for achieving full minimum public shareholding of 25 percent has been extended to ten years.
Furthermore, SEBI has increased the institutional quota allocation from 30 percent to 40 percent, providing mutual funds, which are benefiting from robust systematic investment plan (SIP) inflows, with additional liquidity.
