Fresh Capital Raised via IPOs Reaches 9-Year High, Signaling Private Capex Revival

In 2024, fresh capital raised through IPOs by 37 companies amounted to ₹33,610 crore, with approximately 45%, or ₹15,190 crore, coming from new shares.

This marks the highest proportion since 2015, when nearly 48% of the funds raised were fresh capital.

These funds were primarily used for financing capital assets or retiring debt incurred to build capacities.

Mumbai: Despite significant selling by promoters and private equity players in the secondary market, the amount of fresh capital raised via IPOs in the first half of the year has reached a nine-year high.

This suggests a gradual revival in capital expenditure by India’s private sector.

Amid market enthusiasm, companies are leveraging fresh capital to strengthen their balance sheets for future growth, according to bankers.

Ravi Sardana, an investment banker, noted that strong domestic consumption is driving fresh investments in capacity expansion, with companies preferring fresh equity raised at attractive valuations over interest-bearing debt.

The ₹1,800 crore IPO of Juniper Hotels was entirely a fresh equity issue, with no offer for sale (OFS) component, and the net proceeds of ₹1,500 crore were earmarked for debt repayment.

Similarly, Entero Healthcare Solutions' ₹1,600-crore IPO included a ₹1,000-crore fresh issue to fund working capital needs and reduce debt from ₹489 crore to ₹346 crore.

Allied Blenders and Distillers' ₹1,500-crore public offering included ₹1,000 crore in new shares, primarily for debt reduction.

Companies are preparing for economic growth by investing in capital expenditure to take advantage of an expected boom.

Dharmesh Mehta, MD of DAM Capital, mentioned that most recent public offerings are from the manufacturing sector, seeking funds for capital expenditure and acquisitions.

Jyoti CNC Automation’s entire ₹1,000-crore IPO was a fresh issue for long-term working capital and debt reduction, while ₹600 crore of Apeejay Surrendra Park Hotels’ ₹920-crore IPO was a fresh issue.

About 60% of the IPOs that successfully raised funds in 2024 are from the manufacturing sector or capital-intensive industries like hotels, hospitals, and construction. In 2023, 42% of the ₹42,400 crore raised came from fresh issues, compared to only 30% in 2022.

Over the decade from 2013 to 2022, the average funds raised from fresh issues was just 30%.

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