Q1 turns out to be busy for equity capital markets as number of IPOs jump 36% compared to a year ago

• The first quarter of 2023 saw a decrease of 86.7% in the amount of money raised by Indian issuers through Initial Public Offerings (IPOs) but number of new issues increased.
  
• Equity capital markets issuance from India’s industrials sector accounted for the majority of the nation’s ECM activity with 36.1% market share.
  
• India-involvement announced M&A activity reached a seven-year low in the first quarter of 2023, with a total value of $10.8 billion.

During the first quarter of 2023, the equity capital markets (ECM) in India generated a total of $5.3 billion, which is a 42.4% increase compared to the same period last year. This marks the highest first quarter in terms of proceeds since the beginning of 2021. Additionally, there was a 50.9% growth in the number of ECM offerings year-on-year, reveals a report by Refinitiv, a provider of financial market data and infrastructure.

Equity capital markets

The first quarter of 2023 saw a decrease of 86.7% in the amount of money raised by Indian issuers through Initial Public Offerings (IPOs), with only $142.8 million raised compared to the previous year. However, the number of IPOs increased by 35.7% year-on-year. On the other hand, follow-on offerings, which made up 97% of India's total ECM proceeds, experienced a significant increase of 95% from the previous year, raising $5.1 billion. The number of follow-on offerings also grew by 68% Y-o-Y.

ECM issuance from India’s Industrial sector accounted for the majority of the nation’s ECM activity with 36.1% market share worth $1.9 billion in proceeds, a significant increase from a year ago ($6.8 million). Materials captured 14.0% market share followed by Retail and Energy & Power with 11.3% and 10.8% market share, respectively.

Debt capital markets

During the first quarter of 2023, primary bond offerings from issuers domiciled in India generated a total of $23.9 billion in proceeds, which represents an increase of 8.2% compared to the previous year. This marks the highest first quarter period since 2021 when the amount raised was $25.8 billion.

The Financials sector in India captured 80.6% of the market share, amounting to $19.3 billion, which is a significant increase of 55.6% in proceeds compared to the previous year. The Government & Agencies followed closely behind, holding a market share of 5.1%, worth $1.2 billion, which represents a 34.7% increase from the same period a year ago.

Mergers and acquisitions

India-involvement announced M&A activity reached a seven-year low in the first quarter of 2023, with a total value of $10.8 billion. This represents a significant decline of 68.3% from the same period last year, with the number of announced deals also dropping by 3.3% year-on-year.

During the first quarter of 2023, Target India M&A activity declined by 70.4% to reach $8.5 billion compared to the same period last year, with domestic M&A activity down by 67.3%. Inbound M&A also declined by 73.9% to $3.6 billion, while outbound M&A activity reached $2.1 billion, a decrease of 58.8% year-on-year, with the United States being the most targeted nation with a 39.2% market share.

Says Elaine Tan, senior analyst, Refinitiv, “Deal making involving India saw its third consecutive quarterly decline in activity during the first quarter of 2023, making it the slowest start to a year since 2016, as several headwinds such as geopolitical tensions, supply chain disruptions, rising interest hikes and global recession fears continue to dampen boardroom confidence and investor sentiment. Given the global macroeconomic uncertainty, deal makers are taking a relatively cautious approach, translating into fewer large deals. In fact, no deals bigger than $1 billion involving India have been announced during the first quarter of 2023. Globally, mega deals worth $5 billion and up also declined 48% from a year ago.”

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