Amongst the unlikely collateral casualties of the Russia-Ukraine war are Indian IPOs, which are on hold due to gloomy investment climate and uncertainty since the invasion. At least 45 Indian companies have stalled their plans of raising up to ₹1.3 lakh crore (over $17 billion) through initial public offering. These companies got SEBI approval for listing.
The financial environment of rising inflation, spiralling commodity prices, paradigm shift in monetary policies of advanced nations, and massive disruption in supply-chain, together, has culminated into a feeble investment climate that has induced companies to shy away from launching an IPO during these times.
The despondence in the Indian stock market is palpable from the fact that even the much awaited IPO of Life Insurance Corporation (LIC) has been postponed. The LIC IPO is destined to be the biggest IPO of India, so far, as market participants believe that its IPO size could be between ₹65,000 crore to ₹75,000 crore. The LIC IPO is singularly contributing to almost half of the total worth of delayed IPOs.
The other big IPOs on the back-burner are - Delhivery (₹7,000 crore), PharmEasy (₹6,250 crore), Emcure Pharma (₹4,000 crore), Sterlite Power Transmission (₹3,000 crore), Five Star Business (₹2,750 crore), JK Files and Engineering (₹2,000 crore), One Mobikwik Systems (₹2,000 crore), Popular Vehicle and Services (₹2,000 crore), Medanta (₹2,000 crore), Healthium (₹1,500 crore), Godavari Biorefineries (1,000 crore), Keventer Agro (₹1,000 crore), and Paradeep Phospates (₹800 crore), among others.
The previous calendar year (2021) was the "year of risk assets" as global equity issuance smashed all past records crossing $1.44 trillion, and India was no different. The central bank's interventions to cut interest rates combined with government support for companies hit by pandemic had buoyed the stock market, boosted growth, and provided easy access to cheap debt for deals. Thus, in the last calendar year, 65 companies, including one Real Estate Investment Trust (Brookfield India REIT) and one Infrastructure Investment Trust (Powergrid INVits), raised a record ₹1,30,938 crore through IPOs. The second best year for Indian IPOs was 2017 in which ₹68,827 crore was raised.
In the last two years, between April 2020 and Mid-March 2022, SEBI had approved 141 IPOs, out of which only 65 IPOs were launched in 2021 and 15 in 2020. The year 2022 has been a major disappointment so far with just a few companies hitting the secondary market.
However, this year, global fundraising activities have also suffered due to uncertainties that deteriorated the market sentiments. As per a Bloomberg report, around 100 companies, globally, have pulled back deals worth $45 billion, since the war. The report stated that deals on the back burner include IPOs, bond offerings, and merger and acquisition activities. The disruption comes as the conflict roiled the funding markets, the Bloomberg report mentioned. Global M&A is down by 15% in the first three months of the year to $1.02 trillion, according to the data compiled by Bloomberg.
As per Crunchbase data, the global new unicorn count has also declined significantly. Before the war, in 2021, at least 44 new companies were attaining the unicorn status every month but now that number has tumbled down to 34 in the month of March 2022. Funding to these unicorns has also halved to $14 billion from average $24.66 billion in calendar year 2021.
