Indian IPO fundraising at 13-year peak
- IBEF
- March 25, 2021
India's IPO fundraising is at a 13-year high, due to increased foreign funds and rising interest from small investors, making it one of the hottest IPO markets in 2021. Fo far in FY21, Indian companies raised US$ 2.2 billion through initial public offerings (IPOs), the highest since 2008, Refinitiv data indicated.
Heavy foreign investor inflows, huge government spending, and strong corporate earnings have pushed Indian markets to greater heights this year, empowering more companies to go public.
Mr. Herald van der Linde, head of Asia equity strategy at HSBC said, “If you want to visit Asia but don't want to put all your resources in one basket (China), India is the most convenient choice.”
Foreign investors have migrated to many emerging market shares as a result of the global stimulus initiated by central banks in response to the COVID-19 pandemic, especially India, where they invested US$ 6.1 billion in January-February, the most of the seven major Asian countries.
India's main NSE Nifty 50 stock index has corrected slightly in March after jumping 31% from November 2020 to mid-February 2021, and some analysts have expressed concern about high valuations, but organisations filing for IPOs remain unperturbed.
This year's Indian IPOs saw first-day gains.
Mr. Sandip Khetan, a partner at consultancy EY in Gurugram, India, said, “The IPO markets are gaining traction, and we're seeing increased interest from businesses across industries planning to raise capital in the near future.”
He said, “Many technology-based Indian startups, backed by major international investors, may go public in the near future, attracting even more foreign capital.”
IPOs have also been bolstered by record levels of engagement from Indian individual investors, especially in public offerings.
According to data from the Securities and Exchange Board of India, the number of new investors, as measured by ‘demat’ investor accounts, reached 51.5 million in January 2021, up from 39.5 million in January 2020.
Increasing number of demat accounts in India
Mr. Herald van der Linde stated that local businesses are being acquired by local investors. 'India is buying India,' as the saying goes. This is a positive trend for initial public offerings.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
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