Mumbai IPOs and Deals Set to Break Records in 2023

Mumbai, January 9: India's primary market and deal-making activities are expected to witness a significant surge in 2023, potentially surpassing the record set in 2021. According to Kotak Investment Banking, the country's leading investment bank, the total funds raised through equity issuances and deals could reach approximately USD 50 billion this year.

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Promising Outlook for Primary Market

Addressing the media, S Ramesh, Managing Director and Chief Executive Officer of Kotak Investment Banking, expressed optimism about the primary market's performance in 2023. He highlighted that the market is likely to be driven by new-age tech companies, leading to brisk activities and an overall inflow of around USD 50 billion. Ramesh emphasized that domestic funds played a crucial role in 2022 by pumping in USD 25.8 billion, and this contribution is expected to double to reach USD 50 billion in the current year.

Furthermore, Ramesh pointed out that Nifty's one-year forward premium stands at a record high of 20.1x, the highest among emerging markets. This indicates ample room for further growth, considering the 10-year average premium of 17.7x.

Anticipated Surge in Large IPOs

V Jayasankar, a Managing Director at Kotak Investment Banking, shared his expectations for a substantial increase in large Initial Public Offerings (IPOs) in 2023. He believes that election-related volatility is unlikely to have a lasting impact on primary market activities, as poll-related issues typically subside within two to three months.

Record-Breaking IPO Performance in 2022

In 2022, the Indian primary market witnessed an impressive performance, with a total of 59 IPOs raising approximately Rs 53,000 crore from the main board. This remarkable achievement placed Dalal Street as the fourth largest stock exchange globally in terms of funds raised, following the United States, China, and Japan.

Robust Deal-Making Activity

In terms of deals, Kotak Investment Banking reported that buyouts totaled USD 55 billion between 2019 and 2023, surpassing the combined value of the preceding 15 years. This surge is attributed to promoter families' willingness to cede control for value creation.

Strategic Diversification of Fundraising

Bankers also highlighted another factor contributing to their optimistic outlook: the increasing trend of corporates strategically diversifying their fundraising efforts. By incorporating a blend of debt and equity, companies are creating attractive investment opportunities.

Emerging Unicorns and Investment Potential

Kotak Investment Banking predicts that the domestic market is poised to witness the emergence of 20 unicorns over the next two years, attracting approximately USD 10 billion in investments. This growth potential further enhances the allure of the Indian market for both domestic and international investors.

In conclusion, India's IPO and deal-making activities are set for a remarkable year in 2023. With a projected inflow of USD 50 billion, a surge in large IPOs, and robust deal-making, the country's primary market and investment landscape hold immense promise for investors seeking lucrative opportunities.