Kotak: ECM Funding Falls Despite Record IPO Year

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AuthorVihaan Mehta|Published at:
Kotak: ECM Funding Falls Despite Record IPO Year
Overview

Kotak Investment Banking reports a 17% drop in overall equity capital markets (ECM) fundraising to ₹5.1 trillion in 2025. The decline stems from weaker follow-on offerings and sell-downs. However, the year saw a record number of Initial Public Offerings (IPOs), with new-age tech firms delivering significant listing gains and domestic investors leading anchor book demand.

Overall equity capital markets (ECM) fundraising fell in 2025, despite initial public offerings (IPOs) reaching a new zenith. Kotak Investment Banking revealed that total ECM volumes declined to ₹5.1 trillion, a decrease from ₹6.1 trillion raised in 2024. This contraction was primarily attributed to a significant drop in follow-on offerings and sell-downs.

Weakness in Follow-on Offerings and Sell-downs

The market saw a substantial contraction in follow-on activities. These include Qualified Institutional Placements (QIPs), Follow-on Public Offerings (FPOs), and rights issues. Volumes in this segment plummeted by 53% to ₹89,761 crore in 2025, a stark contrast to the ₹1.9 trillion secured in the previous year. Similarly, sell-down volumes, encompassing block deals and Offer-for-Sale (OFS) transactions, also experienced a decline, dropping to ₹2.30 trillion from ₹2.6 trillion in 2024.

IPOs Shine Amidst Broader Downturn

In a contrasting trend, the IPO market performed exceptionally well. Domestic Institutional Investors (DIIs) emerged as key drivers of demand and pricing. They accounted for an average of 60% of the anchor book allocations in 2025, an increase from 40% in 2024. This indicates robust domestic investor confidence.

New-age technology IPOs took centre stage, posting average listing gains of 38%. This performance significantly outpaced the average for all IPOs, which was more than three times lower. V Jayasankar, managing director and whole-time director at Kotak Investment Banking, noted improved price discipline and better outcomes for stakeholders.

Jayasankar further elaborated that IPOs with an issue size exceeding ₹3,000 crore achieved average listing gains of approximately 19%. This substantially outperformed smaller IPOs, which saw average gains of around 9%. He observed a pronounced trend of increased IPO activity in the latter half of the year, a pattern seen for several years. Financial Institutions Group (FIG), new-age tech companies, and industrial firms were the leading sectors driving IPO momentum.

Positive Outlook for ECM

Looking ahead, Kotak Investment Banking projects a recovery in overall ECM fundraising. The investment bank anticipates that total ECM fund mop-up will cross the ₹6 trillion mark.

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