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Indian IPOs to raise more than $5bn in 2016

Indian IPOs to raise more than $5bn in 2016

MUMBAI: Indian IPOs are set to raise more than $5 billion in 2016, a six-year high, as corporate profit growth and a pickup in the economy drive investor demand for equities and lure firms such as Vodafone’s local unit to list.

India has been a bright spot in an otherwise dull Asian initial public offering (IPO) market in 2015, with companies in the country raising a combined $2.1bn, a seven-fold jump over the previous year. In contrast, sums raised by bigger markets such as Hong Kong and Australia, have fallen.

Investment bankers, who forecast the IPO proceeds topping $5bn in 2016, say besides the Vodafone unit listing, there will be several financial and technology sector companies going public next year.

“There is a healthy pipeline of deals waiting to hit the market over the next 12 to 18 months and an equally strong investor interest to buy into these deals,” said Sunil Sanghai, head of banking at HSBC in India, adding companies would need equity capital as new projects take off.

Volatile markets and slowing economic growth had dampened IPO launches in India in the past few years, and led to sluggish revenue growth and rising debt at companies in Asia’s third-largest economy.

But Prime Minister Narendra Modi’s push to cut bureaucratic red tape to improve ease of doing business, bolster the country’s manufacturing sector and attract more foreign capital is now set to give a boost to the IPO momentum. And corporate earnings growth is set to quicken.

India’s listed large and mid-cap companies are expected to post an average net income growth of 21.6pc in the next fiscal year beginning in April, up from 9.2pc in this fiscal, according to Thomson Reuters Starmine data.

Courtesy : Dawn News



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