India Tops Asia: $3.9 Billion Raised in IPOs, Outpacing South Korea and Hong Kong

India has raised about $3.9 billion through initial public offerings (IPOs) so far this year, more than double the amount raised during the same period in 2023. This total surpasses the combined amounts raised in South Korea and Hong Kong, according to Bloomberg data.

The increase in activity for block and placement sales is even more impressive. In the first half of 2024, the sales of new and existing shares have brought in around $18.64 billion, nearly breaking the record set in the last half of 2017.


Major IPOs on the Horizon

The largest IPOs of the year are yet to come, including South Korea’s Hyundai Motor Co.’s first-time share sale of its India unit, which could raise about $2.5 billion. This would be one of the biggest listings in India. According to bankers, this is just the beginning of a significant rush.

“This variety of companies entering the market is incredible,” said V Jayasankar, a managing director at Kotak Mahindra Capital Co. “For the first time in my over thirty-year career, I am seeing this level of market activity.”

Post-Election Momentum

Jayasankar believes the equity capital markets will grow even more after the elections, continuing through 2025. He predicts that IPO fundraising could exceed $20 billion over the next two years, with overall equity capital market activity, including follow-on offerings and stake sales, also seeing strong growth.

Adani Enterprises Ltd. and its power utility unit Adani Energy Solutions Ltd. have received approval to raise up to $3.5 billion through share sales. Additionally, Vedanta Ltd., led by Anil Agarwal, could raise about $1 billion in a share sale soon, Bloomberg reported.

Economic Growth Boost

India’s economic growth surpassed 8% in the fiscal year ending in March, boosting Prime Minister Narendra Modi’s government.

“Investors are focused on the country’s strong fundamentals and the various sector stories and company profiles,” said Rahul Saraf, Citigroup Inc.’s investment bank head for India. “India’s consumption and growth stories are attractive, and we have a healthy pipeline of IPOs that will continue in the coming months.”

With the end of the elections, companies are ready to capitalize on India’s strong economic prospects and take advantage of the favorable market conditions.

Increased Confidence

“People are now much more confident in terms of policy continuity and reforms,” said Jibi Jacob, head of equity capital markets in India at Jefferies Financial Group Inc. He noted that even before the elections, the number of IPO filings had increased from the previous year.

Long Queue for Listings

There is a long queue of potential IPOs. The Bajaj Group plans to file for an IPO of its housing finance unit in the final quarter of 2024. Indian supermarket chain Vishal Mega Mart Pvt. and electric-scooter maker Ather Energy Pvt. are also planning IPOs in Mumbai this year. Additionally, Novelis Inc., owned by Hindalco Industries Ltd., is looking to raise up to $945 million in a US IPO next week.

India vs. Other Asian Markets

The rush for Indian IPOs contrasts with other Asian markets like China and Hong Kong, where activity is slower due to geopolitical tensions and growth concerns. Factory activity in China unexpectedly dropped in May, a warning sign for its economy.

“India may be on the verge of a decade of rapid development and could surpass China as the world’s growth engine in the coming years,” wrote Bloomberg Intelligence’s strategists Marvin Chen and Nitin Chanduka in a May 29 note.

This economic growth supports the likelihood of more IPOs from a variety of companies, from established corporations to startups. Private equity firms are also focusing more on India, looking to exit portfolio companies and invest the funds they have raised for their Asia strategies in recent months.

Carlyle Group Inc. is considering listing Indian IT company Hexaware Technologies Ltd., while Hillhouse Investment is exploring options, including a share sale for the Indian unit of Versuni Group BV, formerly Philips Domestic Appliances.

As the Indian election results come in, companies, bankers, and investors will have a lot of work to do to finalize their plans in the coming months. According to Jefferies’ Jacob, it’s not just the number of IPOs that matters, but the higher quality of companies seeking listings, with better governance, financial performance, and larger offerings, which is encouraging for investors.

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