Share prices of Indian companies listed on the London Stock Exchange continued to outperform both the AIM All-Share and the FTSE 100 indices during the first quarter of 2010, according to new research.
The news comes ahead of Essar Energy’s planned £1.6 billion listing of a minority stake in London, which is due to be priced by its brokers later this week. Trading in Essar is set to begin at the end of April and should see it launch into the FTSE 100 with a valuation of between $9.5bn and $11bn.
Analysts from business advisory firm Grant Thornton, which tracks London-listed Indian groups, believe that success for Essar could trigger a number of other London listings by Indian companies. Interest in London is believed to stem from the stronger valuations and improved liquidity that Indian companies can achieve compared to those in their own domestic markets.
Grant Thornton’s India Watch index rose 8% in the first three months of 2010 and is 3.4 times higher than twelve months earlier, having risen an eye-watering 237% since April 1, 2009. By comparison, the AIM All-Share recorded gains of 70% since April 1, 2009, while the FTSE 100 has seen a 45% rise. In the first quarter of 2010, the AIM All-Share rose by 7.5%, while the FTSE 100 was 5% up.
Anuj Chande, Head of South Asia Group at Grant Thornton, says the outstanding performance of Indian firms listed in London is encouraging other Indian firms to look into raising funds here.
“In early March, more than 70 Indian firms attended a roadshow hosted by the London Stock Exchange Group (LON:LSE) in New Delhi, Mumbai and Hyderabad,” he said. “A lot of these will be holding their breath to see if Essar Energy can pull off the biggest primary listing that London has seen for ten years.”
The best performing India Watch stocks in the first quarter of 2010 were Greenko Group (LON:GKO), Dq Entertainment (LON:DQE) and Unitech Corporate Parks Plc (LON:UCP) with price increases of 41%, 39% and 35% respectively.
Chande said his firm was in advanced negotiations with another Indian power provider for an IPO planned for later this year and was also talking to ten other candidates planning to raise capital in London during 2010.
He noted that despite the strong performance of the India Watch index, Indian companies continued to face challenges in terms…
