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IPO market heads for mega year, 50 companies raise USD 2.93-bn in 2016


The year 2016 is set to be a record-breaking year for Indian IPO market as 50 firms have entered Dalal Street with initial share-sale offers to garner USD 2.93 billion and an impressive pipeline is already in place for the coming months, says a report.

Besides, another 22 companies have lined up IPO plans in 2016 bringing the year-end estimated total deal value to USD 5.8 billion, more than double from last year’s deal value of USD 2.18 billion.

According to a report by Baker & McKenzie, Indian IPOs are set to hit a six-year high, with USD 2.93 billion already completed and a further USD 2.90 billion of IPOs in pipeline for 2016.

Further, 16 companies are in the pipeline to be listed domestically in 2017, raising USD 5.86 billion. This includes Vodafone’s highly anticipated USD 3 billion initial share-sale plan, which could potentially surpass the state-run Coal India’s IPO to become the country’s biggest public issue.

The report said that momentum in the Indian IPO market continues to build, boosted by Prime Minister Narendra Modi’s drive to improve ease of doing business. These efforts include rationalisation of tax regime.

“The GST Bill will not only bring about the immediate benefit of widening the country’s tax base and improving the revenue productivity of domestic indirect taxes, but more importantly, it sends the message to the people of India and rest of the world that Indian government is committed to economic reform, further bolstering country’s attractiveness as an investment destination,” Ashok Lalwani Head of Baker & McKenzie’s India Practice said.

Domestic listings continue to dominate India’s IPO scene. Dual listing on both exchanges – BSE and NSE – accounted 98.8 per cent of companies listings by value in 2016 to date, raising a total of USD 2.9 billion from 19 IPOs, including
ICICI Prudential Life Insurance’s USD 909 million IPO, which is the country’s biggest IPO this year.

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 2016 pipeline, Strand Life Sciences’ listing on Nasdaq, which if goes ahead, will be country’s first cross-border IPO after Videocon d2h. In terms of sectors, materials, industrials and financials have been the busiest space by both value and volume over the past five years, and also in 2016 year-to-date by equity deal volume.

Looking ahead, Lalwani believes that, “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.”

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