Is the IPO race back again?

India’s Initial Public Offering (IPO) landscape is experiencing a resurgence. In recent years, India has emerged as a global powerhouse in the IPO market, positioning itself at the top globally in terms of IPO volume.

In 2024, India witnessed an extraordinary surge in IPO activity. The country hosted nearly twice as many IPOs as the United States and 2.5 times more IPOs than Europe. Last year, a total of 327 companies went public, raising approximately USD 19.9 billion,  a 36% increase in the number of listings and a 150% surge in capital raised compared to the previous year.

This momentum is expected to continue into 2025 as well, with projections indicating capital raised in the USD 45 billion to USD 50 billion range and up to 160 debuts, as per a report by Deloitte on the IPO market for 2025.

Sectoral Dynamics

At the current time, the technology sector seems to be at the forefront of this IPO boom. For instance, edtech giant PhysicsWallah has confidentially filed draft papers aiming to raise approximately INR 4,600 crore through its IPO. Similarly, e-commerce platform Meesho plans to raise around USD 1 billion, targeting a valuation of USD 10 billion, with the listing anticipated around Diwali this year.

While the market showed remarkable diversity in terms of sector participation last year, some of the notable sectors included automobiles, telecom, and SMEs. Hyundai Motor India’s IPO was the largest in 2024, raising INR 27,280 crores, whereas Vodafone Idea raised INR 18,000 crores. From the SME sector, Danish Power led the electric equipment segment, raising INR 197.90 crores.

What are the catalysts driving the IPO surge?

It seems the regulatory environment and government support are playing a crucial role in fostering market growth. Some of the key regulatory changes implemented by the Securities and Exchange Board of India (SEBI), such as the reduction in IPO listing timelines from T+6 to T+3 days (effective 1 December 2023), enhanced scrutiny of IPO documents by SEBI, mandatory ESG disclosures for the top 1,000 listed companies, and liberalization of foreign investment rules, have a huge role to play in this matter.

Also, the streamlined compliance processes, such as reducing the time for reverse mergers from 12-18 months to about 3-4 months, have facilitated easier market entry for companies.

Furthermore, the surge isn’t limited to large corporations. SMEs are also actively tapping into public markets, but SEBI has tightened regulations for SMEs seeking to go public, including stricter eligibility norms and enhanced disclosure requirements.

How can businesses capitalise on this time?

The IPO surge presents several strategic considerations, such as capital acquisition, visibility, liquidity, etc. Going public offers an avenue to raise substantial capital for expansion, research and development, and debt restructuring.

A public listing helps elevate a company’s market profile, attracting customers, partners, and top-tier talent. An IPO also provides liquidity options for early investors and employees, potentially aiding in talent retention and motivation.

Future Outlook

The trajectory of India's IPO market reflects a maturing financial ecosystem characterized by diverse sector participation and regulatory advancements. As the landscape continues to evolve, proactive engagement with market trends and regulatory frameworks will be key to sustaining growth and achieving long-term success in India's burgeoning capital markets.