India’s banks will struggle to keep equities crown
19/02/2025 12:00
(The author is a Reuters Breakingviews columnist. The opinions
expressed are her own.)
By Shritama Bose
MUMBAI, Feb 19 (Reuters Breakingviews) - India’s
dealmakers are celebrating their arrival on the global map. Last
year, Kotak Mahindra Bank KTKM.NS not only topped LSEG's
league table for initial public offerings in Asia by volume,
edging out CITIC 0267.HK and JPMorgan JPM.N , but it also
broke into the ranks of the top 10 underwriters of common stock
deals globally by proceeds. Both are firsts for an Indian
investment bank. But the strong showing by the $45 billion firm
and its compatriots may prove hard to sustain.
A record $71 billion in equity fundraising powered the South
Asian country's climb past China and Hong Kong to the spot of
the world’s second-largest destination for share placements
behind the U.S. last year, per Dealogic data. New-economy
companies including Swiggy SWIG.NS and Ola Electric Mobility
OLAE.NS going public were a lynchpin for strong fees.
Meanwhile, punchy valuations prompted global businesses like
Whirlpool WHR.N to cash out stakes in their local units and
Hyundai Motor 005380.KS to take its Indian business public.
It spelt a bonanza for banks like Kotak and ICICI Bank
ICBK.NS , both of which trade at 3 times forward book value,
the top of their peer group. Their rise up the league tables
buys them credibility beyond those rich valuations.
The mood is upbeat. At a Mumbai conference of investment
banks in January, a singer belted out chest-thumping patriotic
numbers in the presence of Madhabi Puri Buch, chief of
Securities and Exchange Board of India, the capital markets
regulator. Sundararaman Ramamurthy, the CEO of BSE BSEL.NS ,
one of the country’s two main stock exchanges, described the IPO
boom as a moment of India’s “re-emergence” on the world stage.
The pipeline remains strong. Kotak has won a mandate,
alongside Morgan Stanley MS.N , for what could be India's
largest ever IPO, an up to $4.6 billion listing of Reliance
Industries' RELI.NS telecommunications business, IFR reported
in January, citing unnamed people. HDFC Bank’s HDBK.NS shadow
lending unit has filed for a $1.44 billion float. Businesses
ranging from the local unit of South Korean consumer appliances
giant LG Electronics 066570.KS to Tiger Global-backed
stockbroker Groww are preparing for billion-dollar listings too,
per IFR. Kotak expects primary fundraising in India to rise 59%
from last year’s level to $35 billion in 2025.
But the broader environment is less cheery. Foreign
portfolio investors are dumping Indian shares and companies are
reporting dismal earnings, pulling indexes off last year’s
dizzying highs. The outlook for GDP growth is sombre. Beijing's
push for higher-valued startups could rejuvenate dealmaking in
China this year, and Hong Kong listings are rebounding from a
20-year low. The two centres notched up a total $132 billion in
equity transactions in 2023 before markets slumped.
Kotak and its peers may find their dealmaking crown was
easier to earn than to hold.
Follow @ShritamaBose on X
CONTEXT NEWS
Kotak Mahindra Bank was the 10th largest bookrunner globally
for common stock deals by proceeds in 2024, with a 1.5% share of
the market, according to LSEG data. It also topped the league
table for Asian initial public offerings, including Chinese
A-shares, facilitating listings that raised $2 billion during
the year.
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Graphic: India equity fundraising edged past Hong Kong in 2024
https://reut.rs/3WDLcu6
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(Editing by Antony Currie and Aditya Srivastav)
((For previous columns by the author, Reuters customers can
click on BOSE/
shritama.bose@thomsonreuters.com))