India Tops Global IPO Charts with Record Fundraising in Primary Markets

India's primary markets have experienced a remarkable boom in fundraising during the financial year 2024-25, with total resource mobilization reaching INR14.2 lakh crore, marking a significant 35.2% jump from the previous year. The equity markets, in particular, witnessed unprecedented levels of public fundraising, including Initial Public Offers (IPOs), Follow-on Public Offers (FPOs), and Rights Issues. Companies collectively raised about INR2.1 lakh crore from public equity offerings, which is 2.5 times more than in FY2023-24.

A significant highlight is India's ascent to the top global position in IPO volumes for the first time, as reported by the EY Global IPO trends 2024. This robust momentum is extending into FY2025-26, with INR8.59 lakh crore already mobilized in the first six months.

The funds raised can be categorized into Offer for Sale (OFS), where existing shareholders sell their stakes, and Fresh Issues, where new capital goes directly to the company. Out of the INR2.1 lakh crore equity raised, approximately INR67,000 crore was from fresh issues, and INR1.05 lakh crore from OFS. Additionally, companies raised about INR1.35 lakh crore through Qualified Institutional Placements (QIPs) and INR84,084 crore via preferential allotments, totaling over INR2.85 lakh crore in equity that went into the hands of listed companies. Debt instruments contributed INR9.94 lakh crore, bringing the total funds in companies' control to INR12.80 lakh crore.

Impact: The utilization of these funds is crucial for investors. If companies use the raised capital as stated in their prospectuses or placement documents, investors can expect their share values to grow. However, deviations from the stated purpose can lead to losses for shareholders. The article emphasizes the need for a stronger regulatory framework to ensure transparent fund utilization and prevent potential misuse, especially by SMEs and promoter-dominated companies. SEBI has regulations in place like monitoring agency appointments and deviation reporting, but further strengthening is suggested to empower shareholders and prevent adverse deviations. Impact Rating: 7/10

Difficult Terms Explained: * Primary Markets: These are markets where companies issue new securities (like stocks or bonds) directly to investors to raise capital. * Equity: Represents ownership in a company, typically in the form of shares. * Debt: Money that a company owes to lenders, which needs to be repaid with interest. * Resource Mobilisation: The process by which companies or organizations gather funds for their operations or expansion. * IPO (Initial Public Offering): The first time a private company offers its shares to the general public for investment. * FPO (Follow-on Public Offer): After an IPO, a public company can issue additional shares to raise more capital. * Rights Issue: An offer made by a company to its existing shareholders to buy additional shares, usually at a discounted price, in proportion to their current holdings. * OFS (Offer for Sale): Existing shareholders, such as founders or venture capitalists, sell a portion of their shares to the public. The money raised goes to the selling shareholders, not the company. * Fresh Issue: A company issues new shares to the public, and the capital raised is used by the company itself for its business activities. * QIP (Qualified Institutional Placement): A method for listed companies to raise capital by issuing shares or convertible securities to a select group of institutional investors without extensive public disclosure. * Preferential Allotment: A private placement of shares or securities to a specific, select group of investors, rather than through a public offering. * Prospectus: A formal legal document that must be filed with regulators and provided to potential investors when a company offers securities for sale, detailing the company's business, financial condition, and investment risks. * Placement Document: Similar to a prospectus, but typically used for debt or other capital instruments, outlining terms and risks. * SEBI (Securities and Exchange Board of India): The regulatory body that oversees the securities markets in India, ensuring investor protection and market integrity. * ICDR Regulations (Issue of Capital and Disclosure Requirements): SEBI regulations that set the rules for companies issuing capital to the public, ensuring adequate disclosure and investor protection. * Monitoring Agency: An independent third party appointed to track and report on how a company uses the funds it has raised from the public. * Audit Committee: A committee formed by a company's board of directors to oversee financial reporting, internal controls, and the audit process. * IRDA (Insurance Regulatory and Development Authority): The statutory body that regulates the insurance sector in India. * AIF (Alternative Investment Fund): A type of privately pooled investment fund, often for sophisticated investors, that invests in assets beyond traditional stocks and bonds. * Stewardship Policy: A framework adopted by institutional investors to actively engage with the companies they invest in, monitoring management and corporate governance to enhance long-term value. * Forex Conversion Rates: The rates at which the currency of one country can be exchanged for the currency of another country. * Postal Ballot: A procedure allowing shareholders to vote on company resolutions by mail or electronically, rather than attending a physical meeting. * SMEs (Small and Medium-sized Enterprises): Businesses that fall below certain thresholds in terms of size, turnover, or number of employees, often playing a crucial role in the economy. * Promoter: The individual or group of individuals who founded a company or have significant control over its management and operations.