The ICICI Bank issue was oversubscribed within an hour of opening, thanks to the phenomenal institutional, especially foreign institution, interest for Indian paper. But a public offering takes a lot of time and costs money. In comparison, institutional placements are more efficient, which make them a hit in India.
This is one of the trends highlighted in the Ernst & Young Global IPO Trends Report 2007 released today. “Institutional placements are a big hit in India now. It is a two-way opportunity, for local businesses to gain access to global funds without having to list abroad and for foreign investors to invest in Indian companies,” said R Balachander, IPO leader (strategic growth markets), Ernst & Young, India.
The report states that foreign institutional investors contribute three-fourths of the new capital flowing into the Indian market and the private equity rush into India is creating the potential for many IPO exits.
The IPO trends over the last 18 months reflect the effects of globalisation, flourishing stock markets, vibrant growth in emerging economies, escalating rivalry between the world’s stock exchanges, a boom in large listings on local exchanges, and the proliferation of alternative financing options, the report points out.
“As capital becomes more global, the vast majority of IPOs stay local. Around the world, 90 per cent of the world’s companies choose their primary place of listing in the market where they operate,” it adds. India too followed this trend.