Of the new equity component, 26% was allocated to capital expenditure, 29% to debt repayment, 9% to investments in subsidiaries and 6.2% to working capital. Details for 24.5% of the funds were not disclosed, the report said. The 189 IPOs also include companies that tapped the stock market or submitted a draft prospectus this financial year.
The findings echo comments from chief economic adviser V. Anantha Nageswaran, who recently said IPOs are increasingly becoming exit routes for early-stage investors rather than tools for raising long-term capital. “This undermines the spirit of public markets,” he had said, adding that Indian capital markets need to grow not only in size but also in purpose.
Most proceeds go to paying off debt, investing in weapons and working capital, and not to expansion: BoB research
The BoB economist noted that attracting new capital is usually linked to new investment plans. “The salient point here is that of the ₹1.82 lakh crore proposed to be mobilized, 66% would come through a fresh offer, while the balance would go to existing shareholders through OFS,” the report said. “If existing shareholders sell their stake, the proceeds will go to them and not to the company for business plans.”
The article concluded that companies receive 65-67% of total IPO proceeds, and of that, roughly 26% (or 16.5% of total equity raised) is used for capital investments, while a slightly larger share is used to repay debt. The analysis was based on draft offering documents and prospectuses filed with the Registrar of Companies.
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