India's IPO momentum seen growing on prospects of political stability

Tata Technologies

19/12/2023 09:34

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      State poll wins boost confidence for 2024 poll -Bank of
America
    

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      Despite falling 16% this year, India's IPOs outpaced Hong
Kong
    

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      India's share of global, Asia IPO proceeds at highs
    

  
    By M. Sriram
       MUMBAI, Dec 19 (Reuters) - Hopes of policy stability in
India after victories for Prime Minister Narendra Modi's ruling
party in key state polls this month should extend a boom in
initial public offerings (IPO) into 2024 as companies rush to
tap investor demand, bankers say.
    The $6.8 billion raised by Indian IPOs so far this year is
16% less than in all of 2022, Dealogic data shows, but
outperforms a plunge of 36%, to about $5 billion, in Hong Kong
listings, which are set for their weakest year in two decades.
    The victory of Modi's Bharatiya Janata Party (BJP) in three 
of four major Indian states gives it a boost ahead of general
elections due by May, and expectations of stability will spur
more fundraising in 2024, bankers said.
    "The state election outcome was more positive than expected,
and has given investors more conviction leading up to the final
elections, boosting confidence," said Subhrajit Roy, India head
of global capital markets for Bank of America.
    At least five companies plan to raise $500 million each, or
more, in India listings next year, including three backed by
SoftBank - Ola Electric, retailer FirstCry, and food delivery
firm Swiggy.  
    More than a dozen others, from lenders to drugmakers and
technology firms, have hastened preparation work on IPOs after
the state poll results, bankers say, without identifying them.
    "Issuers are stepping up the pace on their listing timeline
to tap the current market sentiment," said Mahesh Natarajan,
Nomura India head of equity capital markets. "The number of
deals in the pipeline has multiplied as compared to last year."
    India's market benchmark Sensex  .BSESN  is up nearly 17%
this year and stands at a record, after having risen for seven
straight weeks until last week, in its longest winning run since
January 2018. 
    India's market share of IPO volumes has also grown this year
amid economic slowdown and geopolitical concerns in China and a
slump in U.S. listings. 
    India's share of global IPO proceeds is at an all-time high
of 5.98%, Dealogic says, almost doubling in two years, while its
share of Asia IPO proceeds has also grown to 9.9% this year from
5.9% in 2018.
 
    RECORD YEAR
    The year's major new Indian listings included Mankind Pharma
 MNKI.NS , which raised $500 million in May, the same month that
saw Nexus Malls  NEXE.NS  raise $400 million, while Tata
Technologies raised $360 million in November.
    The fundraising activity has also been boosted by domestic
growth that has beaten estimates, along with upward revisions of
economists' projections, making the country a rare bright spot
for global investors. 
    "India's relevance to the world is ever-increasing, as one
among the few economies continuing to outperform against a
global slowdown," Nomura's Natarajan said.
    Other IPO hopefuls in 2024 include Warburg Pincus-backed
India First Life Insurance, which is eyeing a January listing,
while National Securities Depository Ltd is targeting a listing
in the first quarter, two sources with direct knowledge said.
    Both companies, which received regulatory approval for their
IPOs more than six months ago, did not respond to queries
seeking comment.
    Top bankers are seeing multiple pitches every week, and
expect the momentum to continue into 2024.
    "This is the most momentum we have seen in at least 18
months ... all the signs are there for a record year (in 2024).
India's bullishness seems given today," Bank of America's Roy
said.
    ($1=83.1930 Indian rupees)

 (Reporting by M. Sriram in Mumbai; Additional reporting by
Scott Murdoch in Sydney; Editing by Sumeet Chatterjee and
Clarence Fernandez)
 ((Sriram.Mani@thomsonreuters.com;; Reuters Messaging: Twitter:
@followthemani))