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Fundraising Via Initial Public Offers At 13-Year Peak

India had the third highest IPO proceeds in 2020

Fundraising by way of IPOs is at a 13-year excessive as a flood of overseas cash and unprecedented curiosity from mom-and-pop buyers spur extra listings, making India one of many hottest IPO markets in 2021.

Firms have raised $2.2 billion by preliminary public choices (IPOs) to this point this 12 months, the best quantity since 2008, Refinitiv information confirmed. That follows $9.2 billion final 12 months, the third-biggest behind the US and China, due to a flurry of listings in late 2020.
 

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IPO proceeds at 13-year excessive this 12 months
Photograph Credit score: Reuters

Heavy overseas investor flows into shares, large federal spending and robust company earnings have pushed Indian markets to document highs this 12 months, encouraging extra companies to faucet public markets.

“If you wish to be in Asia, however don’t desire all of your eggs in a single basket, the China basket, India is the simplest choice to go for. It is massive, liquid, and acquired a low correlation with China,” mentioned Herald van der Linde, head of Asia fairness technique at HSBC.
 

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India had the third highest IPO proceeds in 2020
Photograph Credit score: Reuters

The stimulus unleashed by central banks globally in response to the COVID-19 pandemic additionally has pushed flows from overseas buyers into many rising market shares, significantly India, the place they’ve invested $6.1 billion in January-February, the best amongst seven main international locations in Asia.

After surging 31 per cent from November 2020 by mid-February 2021, India’s primary NSE Nifty 50 inventory index has corrected barely in March and a few analysts have raised issues over excessive valuations, however firms submitting for IPOs seem unfazed.

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India leads FII inflows in previous few years
Photograph Credit score: Reuters

“There’s a robust momentum within the IPO markets, and we’re seeing an elevated curiosity from firms throughout sectors trying to elevate capital within the close to time period,” mentioned Sandip Khetan, a associate at consultancy EY in Gurugram, India.

Many technology-based startups, backed by marquee world buyers, may additionally go public within the close to future, which might solely entice extra overseas buyers, Khetan added.

File ranges of participation from Indian particular person buyers, significantly in public listings, has additionally propped up IPOs.

New buyers, as measured by so-called “demat” investor accounts, reached a document 51.5 million in January, rising by roughly 1 million each month from the 39.5 million in January 2020, in keeping with information from the Securities and Change Board of India.

“What you are seeing is native firms are being purchased by native buyers. You would say ‘India is shopping for India’. That is a wholesome development for IPOs,” van der Linde mentioned.

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