IPO fundraising in India drops by 32 per cent
Fourteen Indian corporates raised Rs 35,456 crore through main board IPOs in the first half (April to September) of 2022-23, according to Prime Database.
Fundraising through InvITs and REITs is on the rise as the investors’ enthusiasm is on the rise in these routes. Through these routes, in 2023-24, fundraising reached Rs 17,116 crore marking a 14-fold year-on-year rise.
This is a 14-fold spike in fundraising fuelled by the prospects of stable returns. Industry experts believe that going ahead, the outlook for infrastructure investment trusts (InvITs) and real estate investment trusts (REITs) in terms of fundraising for the current fiscal FY25 is very optimistic.
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Further, the financial year 2024 saw the first-ever offer-for-sale (OFS) by an InvIT, with Data Infrastructure Trust raising Rs 2,071 crore. As per the data, in 2021-20, Rs 13,841 crore was collected through the route while Rs 33,515 crore in 2019-20.
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REITs and InvITs are new concepts in the Indian market but have been a popular choice globally for their lucrative returns and capital appreciation.
The rules for InvITs and REITs were put in place in 2014, the first investment trust was registered with Sebi in 2016-17. At present, there are 24 registered InvITs and 5 REITs with an assets base of over Rs 5.5 lakh crore.
Notably, the markets regulator, Securities and Exchange Board of India (Sebi), has been consistently working on amendments to REITs and InvITs to upscale the governance standards while increasing transparency through provisions like Unitholder Nominated Directors, the cap on leverage, minimum rating requirements, higher disclosure measures than companies, various options to raise equity, such as rights, institutional placement, in addition to IPO.
Additionally, the Sebi has improved the ease of investment by reducing lot size to one or updating the pricing requirements for institutional placements by listed trusts.
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