Indian IPO fundraising at 13-year peak as mom-and-pop investors pile in




Indian fundraising via IPOs is at a 13-year high as a flood of foreign money and unprecedented interest from mom-and-pop investors spur more listings, making India one of the hottest IPO in 2021.


Indian companies have raised $2.2 billion through initial public offerings (IPOs) so far this year, the highest amount since 2008, Refinitiv data showed. That follows $9.2 billion last year, the third biggest behind the United States and China, thanks to a flurry of listings in late 2020.



GRAPHIC: India’s IPO proceeds this year 

GRAPHIC: India’s IPO proceeds in 2020 


Heavy foreign investor flows into shares, massive federal spending and strong corporate earnings have driven Indian to record highs this year, encouraging more firms to tap public


“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,” said Herald van der Linde, head of Asia equity strategy at HSBC.


The stimulus unleashed by central banks globally in response to the COVID-19 pandemic also has driven flows from foreign investors into many emerging market shares, particularly India, where they have invested $6.1 billion in January-February, the highest among seven major countries in Asia.


GRAPHICFII investments into Indian stocks 


After surging 31% from November 2020 through mid-February 2021, India’s main NSE Nifty 50 stock index has corrected slightly in March and some analysts have raised concerns over high valuations, but companies filing for IPOs appear unfazed.


GRAPHICIndian IPOs first day gains this year 


“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,” said Sandip Khetan, a partner at consultancy EY in Gurugram, India.


Many technology-based Indian startups, backed by marquee global investors, could also go public in the near future, which would only attract more foreign investors, Khetan added.


Record levels of participation from Indian individual investors, particularly in public listings, has also propped up IPOs.


New investors, as measured by so-called “demat” investor accounts, reached a record 51.5 million in January, rising by roughly 1 million every month from the 39.5 million in January 2020, according to data from the Securities and Exchange Board of India.


GRAPHIC: Rising demat accounts in 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 said.


 


(Reporting By Patturaja Murugaboopathy and Sachin Ravikumar in Bengaluru; Additional Reporting by Gaurav Dogra in Bengaluru; Editing by Vidya Ranganathan and Kim Coghill)

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor





Source link