New Delhi: India emerged as one of the most active regional markets for initial public offerings (IPOs) with 26 such offerings in the first three months of 2017, as per a quarterly report by consultancy firm EY.
The Europe, Middle East, India and Africa (EMEIA) region ranked second behind Asia-Pacific by number of IPOs in the first quarter of 2017, accounting for 21% of the global total. By proceeds, the region ranked third behind Asia-Pacific and the Americas, accounting for 15% of the global share, the report shows.
“India saw a promising start to IPO activity in the first quarter despite global political uncertainty... India’s re-emergence as a strong, well governed economy gives further impetus to inbound investors’ interest,” Vish Dhingra, executive director with an Indian member firm of EY Global, said in the report.
“With positive macroeconomic factors, continuing regulatory and tax reforms and a robust investor and business sentiment, 2017 promises to be a healthy IPO year,” he added.
The quarter saw a total of 77 IPOs in the EMEIA region raising $5.2 billion. This was an increase of 8% in terms of number of IPOs and 0.5% in terms of proceeds as compared with the same period in 2016.
In the EMEIA region, IPOs were well-balanced across sectors. Consumer products, financials and consumer staples were the three most active sectors by number of IPOs during the period. In terms of proceeds, real estate raised $1.4 billion via seven IPOs, followed by consumer products with $1.3 billion via 10 IPOs and retail with $786 million via five IPOs.
Financial sponsor-backed IPOs represented 9% of the region’s total by number of deals and 30% by proceeds. This was a similar proportion of private-equity-backed IPOs compared to the March quarter of 2016 (10%), but slightly lower in terms of total capital raised (38%).
In terms of cross-border, outbound and inbound activities in January-March, EMEIA recorded five, four and two IPO deals, respectively.
Globally, it was the most active March quarter by number of IPOs since the first three months of 2007, with 369 IPOs raising $33.7 billion, a 92% year-on-year increase in number of IPOs and a 146% increase in proceeds.
The Asia-Pacific region alone accounted for 70% of global IPOs and 48% of global proceeds in January-March 2017.
In India, Delhi-based education services provider CL Educate Ltd, Shankara Building Products and Avenue Supermarts Ltd, the owner of D-Mart supermarket chain, were some of the companies that floated IPOs in the first quarter of 2017. Avenue Supermarts was the biggest IPO of the quarter, raising Rs1,870 crore. It’s also the biggest since PNB Housing Ltd’s Rs3,000 crore IPO in November 2016.
The quarter saw Snap Inc., the parent company of Snapchat, raising $3.9 billion through an IPO, making it the largest tech initial share sale since China’s Alibaba Group Holding Ltd. Also, the $1.8 billion listing of Invitation Homes Inc. helped the New York Stock Exchange (NYSE) emerge as the most active exchange by proceeds in the March quarter.
“Global IPO markets in Q1 2017 saw the highest first quarter by global number of IPOs since 2007. The outlook for accelerated growth in 2017 is optimistic. Economic fundamentals are improving in the major developed economies. Equity index performance and valuations are trending upward, with several major indices reaching all-time highs. At the same time, volatility is low, underpinning positive IPO sentiment. This has been reflected in a promising start to global IPO activity, supported by the successful US listing of a large technology unicorn,” said Martin Steinbach, global and EMEIA IPO leader, EY.