Indian firms likely to raise over $5.8 billion via IPOs this year
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New Delhi: Indian companies are expected to raise in excess of $5.8 billion this year through initial public offerings (IPOs)—double the amount they raised last year.
According to data released by Baker and McKenzie, a global law firm, IPOs in India will hit a a six-year high in 2016. Some $2.93 billion has already been raised through initial share sales and $2.9 billion of IPOs are in the pipeline, according to the data compiled until 22 September. Upcoming IPOs include share sales by Vodafone India Ltd and SBI Life Insurance Co. Ltd.
Over the next 12 months, financial firms and companies in sectors such as insurance, telecommunications, consumer products and services, and healthcare will be busy raising money through share sales. The financial industry has the largest pipeline of IPOs, projected to raise $3.98 billion, followed by telecommunications at $3.12 billion.
The projected figures for 2016—72 issues raising $5.8 billion—is lower than the $8.47 billion raised in 2010 by way of 64 IPOs.
“In a year from 2015 to 2016, we expect IPOs in India to more than double in terms of value and the volume as well,” said Ashok Lalwani, head of Asia Pacific Capital Markets group and India practice at Baker and McKenzie.
The IPO market is expected to continue the trend in 2017, driven by upbeat economic sentiment, improved business confidence, easing inflationary pressure and stable foreign direct investment inflows.
“India is a very good economy; it’s one of the fastest growing economies in the world. If you look at the Indian stock market, it’s healthy, there’s liquidity, there’s a lot of cash. And it’s a thriving market. So this market looks much more interesting and we expect a whole amount of increase in terms of the number of IPOs here,” Lalwani added.
Securities Exchange Board of India (Sebi) regulations in the past have lead to larger participation of domestic investors in the Indian stock market. “Sebi has become increasingly effective and efficient in carrying out its fundamental role as a protector of the interests of investors. Reduced settlement period which has been reduced by 50% and is proposed to be further reduced shortly, quick and consistent processing of documents and introduction of Applications Supported by Blocked Amount (ASBA) by Sebi has increased the liquidity position of domestic investors attracting more domestic investment,” said Bhakta Patnaik, partner and head of capital markets at Trilegal, a law firm.