Southeast Asia is a region in Southeast Asia.
Indonesia
Singapore\sMalaysia
Vietnam\sThailand
Philippines
Myanmar
India
Greater China is a term used to describe a
Asia’s rest
World
Internet Economy & E-Commerce
Technology
Infrastructure and Real Estate
Services in the Financial Sector
Infrastructure for Social Development
This year, Indian companies raised $3.6 billion in IPOs, the most in a decade.
Pixabay is the source of this image.
Nasrin Sultana contributed to this article.
1st of July, 2021
Due to an abundance of liquidity and investor euphoria, Indian companies raised a total of Rs 27,417 crore through initial public offerings (IPOs) this year, the highest in at least a decade when compared to the same period in previous years.
The buoyant stock markets provided an opportunity for private equity and venture capital funds to exit their investments.
The majority of funds raised through IPOs were used to provide an exit to existing PE or VC funds, as well as existing shareholders and promoters, rather than for growth capital for companies, according to data.
According to data from primary market tracker Prime Database, investors and promoters raised around 62.5 percent of the total money raised through IPOs through offer-for-sale (OFS). The remaining 10,278 crore, or 37.5 percent, was used to help companies raise new capital.
The dominance of secondary share sales in overall fundraising in the first half of 2021 is a continuation of a trend seen in recent years, with PE or VC funds that have invested large sums of capital in Indian companies over the last decade increasingly turning to the primary market to exit their mature investments.
As a result, in recent years, the majority of IPOs that have hit the primary markets have had a PE/VC backer, resulting in a higher proportion of secondary share sales in IPOs.
It had been the same story for the previous two years. In both 2019 and 2018, OFS accounted for 73.8 percent and 72.5 percent of total IPO fundraising, respectively.
Due to the covid outbreak, there was only one IPO in the first half of 2020: SBI Cards and Payment Services Ltd. In the first six months of 2019 and 2018, IPOs raised a total of 5,509 crore and 23,452 crore, respectively.
Promoters and other institutional investors have taken advantage of favorable market conditions to exit or book partial profits rather than raising new capital for business growth, according to Gaurav Dua, head of capital market strategy at Sharekhan by BNP Paribas.
“The trend isn’t ideal, but it’s not always bad for retail investors. Retail investors can now invest in some of the fastest-growing companies thanks to the IPO. Simultaneously, there have been instances of IPOs with high valuations and little left on the table for retail investors. As a result, investing in the medium-to-long term must be extremely selective. We believe the IPO market’s hyperactivity will continue in the near future—many mega-IPOs, such as Zomato, LIC, and Paytm, are in the works,” Dua said.
He added that favorable market conditions have made it appealing for companies to raise equity capital at relatively higher valuations, and many have taken advantage of the situation.
Despite the second wave of the pandemic in India and a delayed economic recovery, investors continued to pour money into equities, making them the best-performing asset class in the six months ending June 30.
In the first half of 2021, the Indian stock markets outperformed emerging markets (EMs).
The benchmark indices, the Sensex and the Nifty, rose 8.26 percent and 10.8 percent in dollar terms, respectively, compared to the MSCI Emerging Markets Index’s 6.94 percent gain and the MSCI World index’s 12.5 percent gain during the period. The Sensex and Nifty have gained 10% and 13% in rupee terms since January, respectively, the best six-month performance in the last five years. The benchmark indices, on the other hand, had lost 15% in the previous year.
India has seen 22 initial public offerings (IPOs) so far this year. MTAR Technologies received 139 subscriptions, the most in the last six months. Nazara Technologies Ltd (96 times), Easy Trip Planners (88 times), Shyam Metalics and Energy (85 times), and Indigo Paints were among the companies that received a lot of subscriptions (82 times).
Sona BLW Precision Forgings or Sona Comstar (with a market capitalization of 5,550 crore), Indian Railway Finance Corp. (with a market capitalization of 4,633 crore), Macrotech Developers (with a market capitalization of 2,500 crore), and Krishna Institute of Medical Sciences (with a market capitalization of 2,120 crore) were the top IPOs during this time period.
“In the capital markets, there is a lot of movement. Huge amounts of dry powder awaiting investment, as well as companies looking to list in India or abroad, are driving a lot of activity. In a note, Sandip Khetan, EY India IPO leader, said, “The markets continue to reward companies with robust, scalable, and technology-led business models.”
The original version of this article appeared on livemint.com.
In India in 2021, there will be initial public offerings (IPOs).
Every day, you’ll receive articles like these in your email.
Sign up for The Daily Brief, our daily newsletter.
Register for the Newsletter
Related Articles
Markets & Initial Public Offerings
PharmEasy hires two i-bankers for its IPO in India.
For its IPO, PharmEasy chose JM Financial and Kotak Investment Banking. It’s also possible to hire a foreign bank.
IPOs & Markets India: The Sebi has put the IPOs of Go Air and Aditya Birla Mutual Fund on hold.
The regulator has issued some observations to the merchant bankers of these two issuances, according to the regulator.
To continue reading our free content, create an account.
If you don’t want to get The Daily Brief in your inbox every day, unsubscribe.
REGISTER
Do you already have a login? Here is where you may log in./n
Read More
