The covid 19 induced pandemic has sent waves of irregularities throughout the Indian and global stock markets, with almost every major sector marking ‘record highs’ in their stock market operations. While the pandemic, in its early stages, spearheaded by the large scale lockdowns announced around the globe, sent equity markets into a tailspin, the latter half of 2020 saw miraculous recovered by the markets, accentuated by NIFTY hitting a record high of 15,000; other indexes followed a similar upward trend as well. As we see the country enter the second phase of lockdowns, flashbacks of the 2020 lockdowns could potentially deter investors from entering the stock market in this volatile era. For many, however, this unusual market movement is also perceived as an investment opportunity. If one were to study investments in the last year, stocks that saw value being wiped off due to lockdowns quickly recovered and rallied, making those that invested in them in the volatile time see potentially fruitful returns.

This volatile trend in the stock market, combined with a record number of new Demat accounts by young retail investors, is one companies were eager to capitalise on as well. As a result, IPO fundraising in the country finds itself at a record 13 year high, with the pre-IPO fund of companies reaching 2.2 billion dollars in 2021 thus far alone. In this article, let’s take a look at the factors that contributed to this rally as IPOs raise capital, and aim to analyze whether this upward trend is a short term symptom of the pandemic that will succumb to corrections, or whether the pandemic propelled a positive and sustainable IPO fundraising trend in Indian markets that is here to stay.

IPO fundraising in India Hits a 13 Year High

The IPO markets have been at the forefront of news cycles ever since the onset of 2020, despite the latter half of the year being plagued by covid 19 and the subsequent lockdowns it prompted. A number of noteworthy IPOs were made available to eager investors over the last year and a half. Burger king saw investors make good returns as it aimed to make a splash in Indian stock markets as it joined the list of IPO funds in the country. Nazara Technologies Ltd also sent quivers through the stock market, as it became India’s first publicly listed gaming/gaming-oriented company. And in a move awaited by arguably almost every investor in the country, Zomato also made headlines as it geared up to launch its IPO fundraising campaign, with some estimates putting the IPO valuation of the company at 5.4 billion dollars.

Contributing Factors

There are a number of factors that arguably would have contributed to the IPO rush we are observing in Indian markets today.

Unusual market conditions create unusual opportunities

While some could argue that the flurry of IPO fundraising and pre IPO funds is a result of some companies having to look elsewhere to raise funds due to the severe deficits in business and revenue they were receiving, For others, however, an IPO was not a move aimed at ensuring survival, but a fervent push to capitalise on market conditions. Companies such as Zomato and Burger King arguably benefitted in the lockdown as their catering and delivery services remained unaffected as the demand for it skyrocketed. This provided a unique opportunity to capitalize on the increased attention and business they were receiving.

Let’s take the case of Zomato pre-IPO fund for instance. A couple years ago, the food delivery aggregator market was riddled with competition from Swiggy and Uber eats. Fast forward to 2020-2021 however, with Uber no longer being in the picture (since it was bought by Zomato), the company now enjoys a larger market share. Additionally, the increase in demand for their services in a lockdown when none others were available further helped increase their customer numbers and deliveries. These two factors combined contributed largely to Zomato’s valuation, propelling it to new highs. In this case, one could argue that embarking on an IPO fundraising expedition during this lockdown time was a strategically beneficial move, as the company looks to capitalise on current situations. In the event that lockdowns are lifted and the pandemic fades; While Zomato would not necessarily lose profit or market share, it would see its valuation also succumb to corrections in the market, making indulging in IPO funds and pre IPO funds a good move to capitalize on these relatively short term market conditions.

Increased Investment Interest

Unusual or unexpected valuations are evidently not the only contributing factor to this rise in IPO fundraising. Indian markets saw investments from a large number of foreign investors who were looking to diversify into Asian markets. For those who wished to diversify beyond the Asian powerhouse that is China (whose reputation and international relationships faltered as a result of the pandemic), Indian positioned itself as the optimum alternative investment opportunity. All credit does not go to foreign bodies however. Alongside the rise in IPO offerings, the stock market also saw a slew of young investors opening demat accounts to begin their investment journey. This trend means that more Indian funds are being reinvested into the economy, reducing the dependency on foreign investments. One could argue that this is a positive trend in the stock market that is here to stay.


While the previous two points have covered bullish contributions to the 13 year high in IPO offerings, we cannot ignore the negative effect that the pandemic had on some industries. Companies from certain sectors such as hospitality and entertainment were also forced to the public markets in order to raise funds to ensure their survival, since lockdowns and restrictions have wavered their businesses, affecting incomes, and in the cases of some, such as movie theatre chains, bringing their operations to a halt entirely. In this case, these IPOs should be viewed as a reactionary measure to the volatile and changing markets, and not necessarily as an indication of growth in the company or sector.


IPO funds and pre IPO funds are the lowest bottom level you can get in, as a stock still does not have added value from demand from the stock market and is offered solely on book value. If you are an individual investor, while you are not guaranteed the IPO allotment you applied for ( due to hedge funds, banks and larger investors getting preference in allotment), IPOs to raise capital are still a good investment, even if you get a smaller piece of the pie than expected. For companies, IPO fundraising is an efficient way to raise funds for the company without diluting holdings of stakeholders, which is further assured by the fact that large investors such as hedge funds and banks are given preference during IPO allotments. The IPO fundraising high in the country can be perceived as a sustainable trend in the market propelled by a couple unusual financial years.