Record fresh capital raised via IPOs this year points to capex revival
capital expenditure by India's private sector that believes a rapidly expanding economy will soon stretch existing capacities.
About half the initial public offerings proceeds of ₹27,435 crore garnered or announced in 2023 are fresh issues, meaning the funds will go into the capital structure of the issuers to either finance capital assets or retire existing debt earlier garnered to build capacities.
The ₹2,800-crore public issue of JSW Infrastructure, India's second-largest commercial port operator, consists entirely of primary shares. Likewise, a significant 88% of the ₹1,370-crore public offering of Samhi Hotels comprises fresh issue of shares.
Recent initial public offerings, such as those by SignatureGlobal, Yatra Online, and Zaggle Prepaid Ocean Services feature fresh issue components ranging from 70% to 85%.
Bankers said companies are preparing for an economic expansion and putting in capital expenditure to encash the anticipated boom. «Most of the recent public issues are from the manufacturing sector, seeking substantial capital infusion for both capital expenditure and acquisitions,» said Dharmesh Mehta, MD & CEO of DAM Capital.
50% from Manufacturing Sector
«Corporations, buoyed by a bullish outlook are diligently strategising to facilitate their anticipated growth trajectory,» he said.
So far in 2023, about 50% of the IPOs that have successfully raised funds originate from the manufacturing sector, while 35% of the issuers belong to other capital-intensive industries such as hotels, hospitals, logistics and construction.
Interestingly, the banking, financial services, and insurance (BFSI) sector accounted for just two IPOs this year.
«Amid the market euphoria, corporations are actively securing fresh capital
