For some public floats, expenses can be up to 17% of funds raised
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Mumbai: Indian companies spent between 1.5% and 17% of the funds raised through initial public offerings (IPOs) as expenses in the past three years, according to data compiled by consultancy firm Uniqus Consulting. The expenses related to a public listing include fees paid to investment bankers, lawyers, auditors, advisors and capital markets regulator Sebi.The larger the IPO, the lower the expense ratio, the data showed. Offerings under ₹500 crore incurred average costs of 9.3%, while mega IPOs above ₹5,000 crore managed to keep expenses down at just 2.6% on average. "This disparity is because while book running lead manager (BRLM) fees-which make up nearly 49% of IPO expenses-are variable and scale with issue size, most other costs such as legal counsel, statutory auditors, Sebi filing fees and printing are largely fixed," said K Raghuram, partner at Uniqus Consulting. "Smaller issuers end up absorbing a larger proportion of fixed costs, while larger issuers benefit from economies of scale and stronger brand visibility." Mukka Proteins spent 17.1% of its ₹224 crore issue size on IPO-related expenses. Similarly, Shah Polymers incurred expenses amounting to 16.6% of its ₹66 crore IPO.In contrast, larger issuances had significantly lower expense ratios. Bharti Hexaware's ₹4,275 crore IPO incurred 1.51% in expenses, while Bajaj Housing's ₹6,560 crore and Hyundai Motor India 's ₹27,870 crore IPO entailed 1.68% and 2.24% expenses, respectively.IPO-related expenses in India are broadly in line with global trends, said lawyers."Compared to global markets like the US, where underwriting and regulatory costs can be even higher, Indian IPO expenses are competitive and justified by the intense due diligence, marketing and compliance efforts required," said Ketan Mukhija, senior partner, Burgeon Law.Government-backed companies typically incur less than 1.5% of the issue size as IPO expenses. Companies such as NTPC Green Energy and LIC recorded exceptionally low expense ratios of 0.54% and 0.58%, respectively. BRLM fees continue to dominate, accounting for nearly half the IPO expenses. These are closely followed by payments to legal advisors and statutory auditors (15%), listing fees (10%) and marketing spending (about 9%).In 2024-25, the average issue size swelled to ₹2,057 crore from ₹814 crore in the previous financial year, reflecting a growing appetite for large-scale fundraising and increased confidence in Indian capital markets. Average listing expenses also went up-to ₹80 crore in 2024-25 from ₹47 crore in 2023-24.
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