IPO Update: As a result of the increased rate and the war, the IPO market has plummeted by 70%.

Initial public offerings (IPOs) have dropped in the first quarter after setting a new high in 2021, as investors become jittery as a result of the Ukraine conflict and rising inflation, sabotaging deals.

In the financial year 2021-22, 52 Indian companies raised an all-time high of Rs.1.11 lakh crore through main board IPOs. According to Pranav Haldea, Managing Director, Prime database, there were only five IPOs in the last quarter.

The total amount raised through IPOs in 2021-22 was more than 3.5 times the Rs.31,268 crore raised through 30 IPOs in 2020-21. The previous high-water mark was set in 2017-18, when Rs.81,553 crore was raised.

Other highlights of the year included IPOs from new age loss-making technology businesses, robust retail engagement, and enormous listing gains.

The largest IPO in 2021-22, which was also the largest Indian IPO ever, was from One 97 Communications (Paytm) for Rs.18,300 crore. This was followed by Zomato (Rs.9,375 crore), Star Health (Rs.6,019 crore), PB Fintech (Policy bazaar) (Rs.5,710 crore), Sona BLW (Rs.5,550 crore) and FSN E-Commerce (Nykaa) (Rs.5,350 crore). As can be seen, four out of the top 6 IPOs were from new age technology companies (NATCs) which together raised Rs.38,734 crore.

The average deal size was a high Rs.2,143 crore.

In 2021, the number of stock market listings achieved a new peak as unprecedented stimulus measures propelled an all-time high in global stocks. Now, with central banks boosting interest rates in reaction to rising inflation and investors alarmed by Russia’s invasion of Ukraine, the situation could not be more dissimilar.

“In terms of market sentiment, this is perhaps the worst period in five years,” said Li Hang, head of equities capital markets and syndicate at brokerage CLSA.

Investors are avoiding companies with high predicted growth rates but little in the way of actual earnings, which are the types of stocks that dominate the IPO market, due to rising interest rates mixed with violent market fluctuations.