India had the third highest IPO proceeds in 2020
Fundraising through 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.
Companies have raised $2.2 billion via preliminary public choices (IPOs) to date this yr, the best quantity since 2008, Refinitiv information confirmed. That follows $9.2 billion final yr, the third-biggest behind the United States and China, because of a flurry of listings in late 2020.
IPO proceeds at 13-year excessive this yr
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Heavy overseas investor flows into shares, huge federal spending and robust company earnings have pushed Indian markets to file highs this yr, encouraging extra companies to faucet public markets.
“If you want to be in Asia, but don’t want all your eggs in one basket, the China basket, India is the easiest option to go for. It’s large, liquid, and got a low correlation with China,” stated Herald van der Linde, head of Asia fairness technique at HSBC.
India had the third highest IPO proceeds in 2020
Photo Credit: 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, notably 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 via 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.
India leads FII inflows in previous few years
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“There is a strong momentum in the IPO markets, and we are seeing an increased interest from companies across sectors looking to raise capital in the near term,” stated Sandip Khetan, a accomplice at consultancy EY in Gurugram, India.
Many technology-based startups, backed by marquee international buyers, may additionally go public within the close to future, which might solely appeal to extra overseas buyers, Khetan added.
Record ranges of participation from Indian particular person buyers, notably in public listings, has additionally propped up IPOs.
New buyers, as measured by so-called “demat” investor accounts, reached a file 51.5 million in January, rising by roughly 1 million each month from the 39.5 million in January 2020, in response to information from the Securities and Exchange Board of India.
“What you’re seeing is local companies are being bought by local investors. You could say ‘India is buying India’. That’s a healthy trend for IPOs,” van der Linde stated.
