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EY India, a leading global professional services organization, released the Q3 IPO Trends report showcasing India's remarkable performance in the Initial Public Offering (IPO) market, with the momentum expected to continue well into 2024.

According to the report, India has emerged as the global leader in the number of IPOs year-to-date in 2023. The third quarter of 2023 saw a staggering 21 IPOs in the Indian main market, compared to just four in the same quarter of 2022. The proceeds raised during Q3 2023 amounted to US$ 1,770 million, a significant increase of 376% compared to US$ 372 million in Q3 2022. This represents a remarkable 425% increase in the number of deals. The Small and Medium Enterprises (SME) segment also recorded significant success by raising US$ 165.76 million via 48 IPOs in Q3 2023.

The three largest IPOs in Q3 in terms of proceeds were RR Kable Ltd, Concord Biotech Ltd, and SAMHI Hotels Ltd. Key sectors contributing to this IPO surge included Diversified Industrial Products, Consumer Products and Retail, and Technology.

In line with regulatory developments aimed at enhancing disclosures and market practices, several amendments have been made, including the introduction of the T+3 mechanism for IPOs. This mechanism allows companies to list three days post-closing of the issue, as opposed to six days earlier. This voluntary measure will become mandatory from December 2023.

Adarsh Ranka, Partner and Financial Accounting Advisory Services Leader, member firm of EY Global, said, “The IPO landscape is witnessing a surge in activity driven by both an urge to tap the capital markets pre-or-post Indian general elections and strong economic activity, positive domestic and foreign investor sentiment towards India. This momentum is expected to continue well into H2 2024. To capitalize on this unprecedented growth, businesses must focus on maintaining transparency, robust governance, and innovation in their business models. Furthermore, staying attuned to changing regulatory and market dynamics will be crucial for sustained success. As we navigate this dynamic landscape, strategic planning, and prudent decision-making will be paramount to make the most of the opportunities that lie ahead.”   

August 2023 witnessed a remarkable US$5.2 billion in PE/VC investments, a 127% increase compared to August 2022 and an 18% increase from July 2023. PE/VC exits reached US$4.3 billion across 37 deals, marking a 35% year-over-year increase in value.

Market optimism is attributed to several factors, including the US recession, the Federal Reserve's pause in interest rate hikes, and inflation. Companies are striving to file for IPOs before the 2024 Indian elections, with the demand for IPOs surging this year compared to 2022.

More than twenty-five companies have filed their Draft Red Herring Prospectuses (DRHPs) in Q3 2023, demonstrating a strong intent to raise funds in the upcoming quarters. The markets continue to reward companies with robust, scalable, and well-governed business models.

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