IPO Market: IPOs pick up pace as year ends with just 4 companies raising $334 million in Q3

After a slowdown in IPO activity post the September quarter, the end of Q3 saw an uptick, finds the recent EY IPO trends report. The three largest IPOs in Q3 in terms of proceeds were Syrma SGS Technology, and Dreamfolks Services, with technology, banking and capital markets and media & entertainment being the most active sectors.

The report points out that in Q3 of 2022, the Indian market introduced 4 IPOs vs 19 IPOs in Q3 of 2021. During Q3 2022, proceeds raised through the main markets equated to $334 million via four main market IPOs compared to $5,101 million during Q3 2021, a 93% and 79% decline in proceeds raised and in the number of deals, respectively. The SME segment raised $68.88 million via 33 IPOs during Q3 2022.

During Q2 2022, proceeds raised from main markets equated to $4,326 million via 13 IPOs compared to 4 IPOs raising $334 million during Q3 2022, a decline of 92% in the proceeds raised and a decline of 69% in the number of deals, as per the EY IPO trends report.

“The IPO market has witnessed a bearish phase recently. The backlog of companies that have received Sebi approval and are yet to float an IPO is set to give market direction in the upcoming quarters. While volatility in the overall global markets and other macro factors will continue to affect investor sentiments, the pipeline of IPOs and momentum created by successful IPOs towards the end of Q3 2022 could lead to a recovery in the market” Adarsh Ranka, Partner with an Indian member firm of EY Global said.

“With the tightening of liquidity, uncertainty caused by global headwinds and sharp correction in some recently listed companies, the sentiment for IPOs dampened to an extent. Investors are adopting a cautious approach, with private equity and large funds reducing their investment spends. In recent times it has been observed that many companies are also trimming down their IPO size,” he added.

The EY IPO trends report also indicated that over 15 Indian companies filed their DRHPs in Q3 this year and are planning to raise funds in upcoming quarters. So as markets pick up, companies with proven business models, higher standards of governance and better financial positioning are the companies that will find it easier to list.

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