Indian companies have raised Rs 27,417 crore by way of IPOs (Initial Public Offerings) so far this year, which is the highest in at least a decade in contrast with six months of previous years.
The euphoria was driven by the profusion of liquidity and investor frenzy. Venture capital (VC) and private equity (PE) funds capitalised on the buoyant stock markets to pull out their investments.
Out of the total money raised via IPOs, promoters and investors raised approx. 62.5% or Rs 17,140 crore through offer-for-sale (OFS), data compiled by primary market tracker Prime Database showed, the Mint reported. The remaining 37.5% or Rs 10,278 crore were raised as fresh capital by the companies.
The data further revealed that in the wake of robust liquidity chasing primary markets, a vast majority of the funds raised through IPOs were utilised to offer an exit to existing VC or PE funds or existing promoters and shareholders, instead of growth capital for companies.
PE or VC funds, which have infused huge sums of capital in Indian companies in the past decade, have increasingly used the primary market course to exit their mature investments, the report added.
Consequently, the majority of IPOs hitting the primary markets has had a PE/VC backer in recent times, leading to a significant share of secondary share sales in IPOs.
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