November sees highest IPO listings, but lowest deal volumes

The primary market witnessed nine initial public offerings (IPOs) in November, which is the highest in 2022, and the fourth highest in the last 11 years, according to the Dealtracker report by Grant Thornton India. The highest number of IPO listings in November coincidentally aligns with strong rally in secondary market as the BSE Sensex and NSE Nifty touched their respective fresh all-time highs. 

Last month, Uniparts India, Dharmraj Crop Guard, Keystone Realtors Limited, Archean Chemical, DCX Systems, Fusion Micro Finance, Global Health (Medanta), Bikaji Foods and Five Star Buisness Finance had their IPO listings. 

However, the month also witnessed a decline in the mergers and acquisitions activity, marking the second-lowest monthly volumes till date, the report said.  

Shanti Vijetha, partner of Growth at Grant Thornton India said, “While the cleantech sector drove the overall values for the month, start-ups continued to push the volumes. Notably, November 2022 witnessed a rise in IPO listings, given the muted activity since June 2022.”

Notably, this year, the country witnessed 32 IPOs so far, with an issue size of $7.6 billion as compared to 53 IPO issues raising $15.4 billion in 2021, according to the report. The qualified institutional placement (QIP) saw 13 issues raising $1 billion compared to 34 issues raising $6.1 billion over YTD 2021. Both IPO and QIP activity continued witnessing a fall in the fund-raising activity via the respective routes over the last year.

Despite record IPO listings, the M&A activity both in terms of volumes and values during the month remained subdued. In November, India Inc recorded 119 deals worth $2.2 billion in November 2022 — a 40% fall in deal volumes and a 37% decline in deal values compared to November 2021, thus marking the lowest monthly deal volumes in 2022. 

According to the report, when compared with October this year, the overall deal volumes witnessed an 8% decline, while values saw a 4% increase owing to two big-ticket transactions in the M&A deal space. The M&A deal volumes witnessed a significant decline by 62%, while values saw an uptrend at 88% over November 2021. The values were driven by high-value deals. While the domestic deal activity dominated the M&A activity, cross-border activity also increased, accounting for 47% of M&A deals. Inbound transactions dominated both cross-border deal values and volumes.

“Globally, over the past six months, the global energy and food supply shocks emanating from the Russia-Ukraine war have intensified. Rising prices of energy, food, and other goods have pushed up the interest rates set by inflation-targeting central banks to levels not seen since the 2008 financial crisis,” Vijetha said.

“The Indian economy has recovered to the pre-pandemic real GDP level of 2019-20. However, amid this, India Inc recorded only 119 deals worth $2.2 billion, given a significant drop in both the M&A and PE deal activity on the back of a cautious and conservative approach taken by strategic and financial investors, considering the prevailing global uncertainties,” she added. 

Last month, the private equity investments dropped by 55% and 32% in terms of values and volumes, respectively as compared to November 2021, owing to a sharp decline in the number of big-ticker investments compared to the past year. The private equity activity witnessed $1.4 billion worth of investments across 100 deals during the month.

“Both M&A and PE values were dominated by the energy and natural resources (cleantech) sector, showing the attractiveness of the segment for both strategic and financial investors. This signifies that there is a big market and a lot of opportunities opening in this sector,” the report said.