BT500: '90% of IPOs in 2023 are above water and doing well,' says Axis Capital's Salil Pitale

Over the past few years, technology changes have dramatically reshaped the Initial Public Offering (IPO) market. Digital solutions, advanced algorithms, etc., have created a seismic shift in traditional methods of issuing and trading public shares. Besides, the involvement of domestic investors also injects substantial financial growth and enhances market stability. This is because domestic investors understand localised market dynamics better and are thus capable of making long-term investment commitments.  

On Wednesday, the high-powered panel of CEOs discussed ‘The Way to Wealth via IPOs’ at the Business Today 500 Wealth Creator Summit in Mumbai. Here are some insightful facts shared by the CEOs on the IPO market and what makes it significant and sustainable.

“Today, investors are extremely clear about what they want to invest and what they don’t want to invest in that makes a big difference. Today, 90% of the IPOs that happened this calendar year are all above water and doing well,” said Salil Pitale, MD & CEO of Axis Capital.  

What has helped is the share amount of domestic capital that is available, which is getting stronger day by day. The book building in India started with a Rs 100 crore issue size; today, it is not a size at all. LIC and Paytm have raised Rs 18,000 crore and Rs 20,000 crore issue and have adequately done with Indian investors putting that in, he said.

“Earlier, there was a lot of dependency on FII investors, but if you take the statistics of all institutional books today, which is split between domestic and foreign, there was a time when 75% of the institutional book was foreign, this time across all IPOs, 60% institutional book is domestic. For the resilience of the market, it is a very strong thing. We expect the market to remain comfortable and sustainable going forward,” added Pitale.

Technological change and information flow

The whole ecosystem has changed dramatically. There is a higher comfort for retail investors in the market ecosystem. They believe it is quite robust. “Technology has been a very big enabling point; now you can do IPO with just one click. The awareness about the companies through social media and media players like Business Today has helped increase the investors’ participation, and right now, information arbitrage is limited compared to earlier days. Now, the information is easily accessible to retail investors,” said Dhiraj Relli, MD & CEO of HDFC Securities.

Economy and governance change

The Indian economy has changed a lot. This generation has started investing in the equity market compared to the previous generation, which only invested in fixed deposits, real estate and gold.

“To do a Rs 50 crore IPO or Rs 100 crore IPO was challenging. There wasn’t any depth in the market. You need to rely on LIC, other large domestic institutions and FIIs and then look for other investors. Today, we are a $5 trillion economy, an m-cap of $4 trillion. All this has resulted in very large IPO issues and a greater appetite for equities,” said Manisha Girotra, Chief Executive Officer of Moelis India. She further said, “The extensive reforms implemented by both the regulator and government have significantly enhanced transparency and corporate governance. With proxy advisors on their toes, these improvements have excelled, offering assurance to global investors. This market now demonstrates a serious commitment to the business of conducting business.”

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