The year 2016 looks set to be a record-breaking year for Indian IPOs as over 70 companies are expected to list on the bourses raising a total of $5.8 billion (almost ₹39,000 crore), more than double of last year’s $2.18 billion (₹14,606 crore), according to a Baker & McKenzie report.
About 50 companies have already raised $2.93 billion (₹19,500 crore), the highest since 2011, there are an estimated 22 more companies in the pipeline before the year ends.
Materials, industrials and financials continue to be busy sectors by value and volume. IPO activity in financials and telecommunications sectors will pick up, as a number of additional mega deals close, including Vodafone’s and PNB Finance Housing Ltd’s IPOs worth $3 billion and $388.45 million respectively. The Vodafone IPO is expected next year.
According to the global law firm, momentum in the IPO market is building due to the government’s drive to cut bureaucratic red tape through measures such as rationalisation of the tax regime via the Goods and Services Tax Act.
Union finance minister Arun Jaitley had also said that the GST legislation alone would boost India’s GDP growth by as much as two percentage points.
“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.
Domestic listings will dominate India’s IPO scene, dual listing on both BSE and NSE accounted for 98.8% of Indian companies’ listings by value in 2016 to date, raising a total of ₹19,400 from 21 IPOs, including ICICI Prudential Life Insurance’s ₹6,000 crore listing, which is the country’s biggest IPO since Coal India’s in 2010.
Apart from domestic listings, Indian companies are also looking at cross-border IPOs to tap growth and market expansion opportunities and the means to access risk capital.
Among upcoming IPOs, Strand Life Sciences’ will list on NASDAQ, which will be India’s first cross-border IPO since early 2015 when Videocon d2h listed on the same exchange.
Aster DM Healthcare and Varsity Education Management are also expected to list soon with IPOs of ₹1,200 crore and ₹2,000 crore respectively.
More listings in the insurance sector could be on the horizon, following the government approval to raise foreign ownership to 49% from 26%. The Insurance Regulatory and Development Authority of India has also proposed to make IPOs mandatory for all general insurance companies in operation for eight years or more, as well as for life insurers that have been operating for 10 years or more.
“The insurance sector is definitely one to watch out for, although IPO momentum will be heavily influenced by the post-listing performance of ICICI Prudential Life Insurance and the readiness of the insurance companies to hit the market,” Lalwani added.