Rs 1.8L crore: IPO boom hits new high this year

India’s initial public offerings have hit a record Rs 1.77 lakh crore ($19.6 billion), as companies rush to capture the booming investor demand for new shares.

The proceeds surpassed last year’s high of Rs 1.73 lakh crore, data compiled by Bloomberg showed. With five more offerings scheduled to close on or before Dec 16, including ICICI Prudential Asset Management Co.’s $1.2-billion deal, the value is set to rise further.

The surge signals how India’s capital markets have matured into a major fundraising hub, driven by a swelling base of retail investors and steady institutional appetite even as secondary equities lose steam. India has been making it easier for companies to list, and the run of big-ticket deals shows how firms are using buoyant demand to lock in funding before global conditions tighten.

Foreign institutional investors, lured by the growth outlook and relatively stable policy backdrop, remain active participants in IPOs even as they sell an almost record amount of Indian equities. That has allowed companies across sectors, including mid-sized manufacturers and tech-led businesses, to raise capital at elevated valuations.

“Returns from secondary market have been muted last one year but the primary market activity has been very robust and in a way shows the deepening of the market,” said Hiren Dasani, chief investment officer for emerging markets at Ashoka Whiteoak Capital.

The euphoria comes with risks. Excessive valuations for some companies have led to some weak performance after the debut. About half of the more than 300 firms listed so far this year are trading below their offer price. These include Tata Capital — the biggest IPO of the year — as well as JSW Cement and WeWork India Management. Still, the pipeline for offerings remains strong. Big share sales that may take place next year include Jio Platforms, expected to be the country’s biggest-ever IPO, the NSE and Walmart-backed e-commerce firm Flipkart.

BLOOMBERG



Get an chance to win ₹5000 Amazon Voucher by taking part in India's Biggest Habit Index! Take the survey here