Mumbai: The Indian IPO market is set to witness its highest fund raising activity in the last six years as improvement in business confidence is driving companies to look at growth and expansion opportunities.
According to Baker & McKenzie, around 50 companies have raised $2.93 billion (approx Rs 20,000 crore) in 2016 till date while another 22 companies are in the pipeline planning to mobilise $2.90 billion during the remaining part of this year.
This is more than double the funds raised in 2015 ($2.18 billion) through 71 listings and also the highest since 2011.
Additionally, there are a total of 16 companies, which have planned to tap the primary market in 2017 to raise $5.86 billion that includes the $3 billion (approximately a little over Rs 20,000 crore) IPO from the telco major Vodafone. This is expected to be India’s largest IPO after state- owned Coal India mopped up Rs 15,000 crore from the primary market in 2010.
“The flurry of IPO activity is likely to continue for the rest of 2016 and well into 2017, driven by upbeat economic sentiment, improved business confidence, easing inflationary pressure and stable foreign direct investment inflows,” said Ashok Lalwani, head of Baker & McKenzie’s India Practice.
He added that the improved business confidence is also driving Indian companies to look at growth and market expansion opportunities overseas by way of cross-border IPOs.
“This provides a means to access risk capital that is not available in India, and also to connect with investors who better understand and appreciate their businesses.
“Among the 22 IPOs in the pipeline, Strand Life Sciences plans to list on the NASDAQ stock exchange in the US. This will be India’s first cross-border IPO since early 2015 when Videocon d2h listed on the NASDAQ,” Mr Lalwani added.
Materials, industrials and financials have been the busiest sectors by both value and volume over the past five years.
The fund raising activity by companies in the financials and telecommunications sectors is expected to pick up pace, as a number of additional mega deals come to fruition, including Vodafone and PNB Housing Finance. Companies in the healthcare and consumer products sectors also have a healthy deal pipeline with a total of 22 deals expected to debut in 2016 and 2017.
