India’s booming market for equity sales is expected to remain buoyant into the new year as high valuations attract companies and shareholders seeking funds while stock-price gains entice investors avoiding China.
Initial public offerings and follow on share sales in India this year exceeded Hong Kong for the first time in at least 30 years, according to data compiled by Bloomberg. The tally of $24.2 billion from such sales in the South Asian market has been helped by gains of some 18% in the country’s stock gauge, while China’s flagging economy has contributed to a slide of almost the same magnitude in its equities benchmark.
India offers “a much more constructive story for capital markets than the rest of Asia. It is as wide open as we have seen it for a while,” said Udhay Furtado, co-head of ECM, Asia Pacific at Citigroup Inc. “Bigger names could be potential candidates for 2024 listings.”
Among prospects in the capital market pipeline is Ola Electric Mobility Pvt. The electric scooter maker plans an IPO of as large as 70 billion rupees ($842 million), IFR reported last week. Others that are taking steps toward offerings include Emcure Pharmaceuticals Ltd. and high-precision machine components maker Happy Forgings Ltd.
“We expect interest in IPOs of high-quality companies to be sustained in 2024,” said Bhavesh Shah, head of investment banking at Equirus Capital Pvt. The predominance of smaller deals offers investors “the best quadrant of growth and profitability with scale building up,” he added.
Investors such as SoftBank Group and the Canada Pension Plan Investment Board earlier this year took advantage of valuations to sell stakes in companies including Paytm. IPOs picked up in the second half, largely driven by offerings smaller than $100 million from a variety of sectors.
The performance of newcomers has been enticing. Sixteen companies listed in the country after raising between $100 million and $500 million are up by an average 72% since their debut. That compares with a 55% gain in Asia Pacific, according to data compiled by Bloomberg.
Tata Technologies Ltd. — the engineering research unit of Tata Motors Ltd., the maker of Jaguar Land Rover cars – has climbed more than 140% since it listed last month. It posted the biggest first-day pop for debuts that raised more than $300 million in the country. Drugs and contraceptive maker Mankind Pharma Ltd. has gained almost 80% since its debut in May.
“In the second half of the year, IPO activity out of India has picked up meaningfully and deals are trading well in the aftermarket,” said Akshay Sawhne, the co-head of APAC equity capital markets at Bank of America Corp. in Hong Kong. “We expect this to continue into next year with larger IPOs expected to come to market,” he said.
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